Wednesday, November 28, 2012

Is the lottery a tax on the poor?

Earlier today, I saw an article posted by a friend on Facebook, asking whether lottery programs were a form of regressive taxation, in other words, whether they have a disproportionate effect on the poor.

The Week | How the $500 million Powerball lottery is a tax on the poor
...One of the main justifications behind lotteries is that the government — at both the state and federal levels — pockets a portion of the jackpot to finance education programs and the like. Consequently, the lottery has often been compared to a regressive tax, one that costs the poor more proportionately than it does the rich. The obvious counterpoint is that, unlike a tax, the decision to buy a lottery ticket is entirely voluntary — no one is holding a gun to your head. Still, critics say, the lottery is undeniably in large part funded by the poor, who are more susceptible to the jackpot's promise of lavish riches.
Personally I've always viewed gambling (which, let's admit it, lotteries are gambling) as a form of entertainment. I approach this type of thing assuming I will lose, so I have to feel like I'll get the entertainment value out of the money I'm spending. I bet $10 on my age on a roulette wheel at Harrah's on a trip to New Orleans several years ago, and I feel like I got $10 of fun out of sitting there for a minute watching the wheel spin around, wondering if I might win. But I wouldn't find that to be $1,000 worth of fun.

More likely than winning the lottery.
Image from National Geographic.
I know many people who buy lottery tickets every now and then, and they seem to get their $1 or $5 worth of fun out of the idea that they might win. Still, I can't help but remember what Henry Pfingstag, my high school calculus teacher told us about the lottery:

In Florida, you have a greater chance of getting hit by lightning twice than winning the lottery once.

Now, when my Dad was younger, he was out on Lake Butler with my uncle in a metal boat when a storm suddenly rolled in, and lightning struck the water near him (he felt the electricity but was fine). So I've told him, if he ever gets hit by lightning again, we're going to have to buy a lottery ticket! 

Lightning strikes aside, this is a worthwhile discussion to have, as state governments are increasingly turning to lotteries to fund education programs.

What do you think? Are lotteries a good way to fund education? Is there a social cost to what we're doing with these programs? Do they cause more harm than good?

Follow me on Twitter at @rumpfshaker

1 comment:

  1. Not sure if it's a tax on the poor but if your calculus teacher is correct, it's certainly a tax on people who are bad at math!


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