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The Iowa Lottery: Gamble for the State or Not At All

Alicia Hansen

continued from page 4 meaning low-income people spend

more as a percentage of their income. Should the government be in the business of selling, advertising, and taxing a product on which the poor bear a disproportionately large share of the tax burden?

Third, good tax policy requires taxes that are easily understood, or transparent. Taxpayers should know if a product is taxed and how much. Lottery retailers do not give customers receipts itemizing the tax, and since states advertise the lottery as a recreational activity rather than as a revenue- raising activity, consumers may be unaware of the heavy built-in tax. In FY 2002 the averageAmerican spent more money on lotteries ($147.12) than on reading materials. Iowans spend less on lotteries than residents of most other lottery states, but that could soon change. Other lottery states have gradually introduced new forms of state-run gambling and have become increasingly dependent on gambling revenue. Six states operate video lottery terminals (VLTs) that offer video blackjack, poker, and slots. It could be a small step from Iowa’s video pull-tab machines to video poker machines. In states with VLTs, people spend considerably more on lotteries — well over


T h e R o l e o f P r i v a t e P r o p e r t y i n F a c t s & O p i n i o n s Q u e s t i o n o f t h e Q u a r t e r :

Is SocialtSecuriityrReform T o m B e t h e l l H e a d e d i n t h e R i g h t D i r e c t i o n ?

Send your thoughts on this issue to us at public.interest.institute@limitedgovernment.org. We will publish some of your ideas in the next issue of Facts & Opinions in August 2005 and on our Website at www.limitedgovernment.org.

Thank you to all of our readers who responded to Febrary's Question of the Quarter!

$1,000 annually per capita in Rhode Island, for example. Legislators’ eyes may light up at the prospect of additional revenue, but they should think twice before expanding the lottery in any fashion — through new games or cornering the market on existing games. They should consider not only the danger of relying on gambling revenue to fill state coffers, but also the tax policy implications. But Senator McCoy and others seem to be content to tell Iowans to gamble for the government — or not at all.

1TimHiggins,“Competitionis hurting lottery, chief says,” The Des Moines Register, <http:// www.desmoinesregister.com>, January 27, 2005.

Alicia Hansen is a Staff Writer for the Tax Foundation. Located in Washington, D.C., the Tax Foundation seeks to educate the public about tax policy. Visit www.taxfoundation.org. Printed with permission.

Social Security Alternative

Jeff Johnson

continued from page 5 nationwide, seven million public employees opted out of the federal retirement plan before Congress eliminated that choice. Those employees’ combined annual incomes for 1999 totaled $129 billion. Based on that figure, and including estimated employer matching funds, those public employees invested approximately $17 billion in variations of private retirement accounts that year rather than in Social Security.

In testimony before the President’s Commission on Social Security in 2001, former Galveston County Judge Ray Holbrook relayed the story of a county commissioner who died in office.

According to Holbrook, the commissioner’s widow received a $255 death benefit from Social Security. But under the Galveston Alternate Plan, she also received


continued on page 8 Public Interest Institute, May 2005

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