More States “Addicted” to Gambling Taxes

April 13, 2005

A recent New York Times story reports states are increasingly getting “addicted” to gambling taxes as an easy revenue source:

Gambling revenues, once a mere trickle, have become a critical stream of income in a number of states… “We’re drunk on gambling revenue,” said Representative Wayne A. Smith, the Republican who is House majority leader in the Delaware Legislature. “Gambling revenues are like free money.”

Probably the most important rule of sound tax policy is “transparency”—it should be clear to taxpayers who’s being taxed and how much—something hidden lottery taxes grossly violate.

For more on why lotteries are poor tax policy, check out the Tax Foundation’s “Lottery and Gambling Taxes” section, especially Alicia Hansen’s excellent overview “Lotteries and State Fiscal Policy.”

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