Oregon gets ‘substantially more’ revenue from the lottery than from corporate income tax

So sad. This from David Cay Johnston at Tax.com (my emphasis):

The long-running drive in America to push the burden of taxes down the income ladder has reached a new milestone in Oregon, which sends a troubling message for where our country’s public finances are headed.

Oregon now gets substantially more revenue from state-sponsored gambling than from its corporate income tax.

The Oregon Office of Economic Analysis, the state agency that forecasts revenue and expenses, said that for the 2011-2013 biennium, the lottery should net the state almost $1.1 billion compared with just under $900 million from the corporate income tax. … In other words, in Oregon those least able to afford it, those who benefit least from America’s economy, are being cajoled into bearing a heavier share of the burdens of government. At the same time, politicians are lavishing ever more tax breaks on corporations, those storehouses of wealth whose managers want to enjoy the benefits of public transportation, public education, public courts, and everything else the taxpayers provide, without sharing in the burdens.

And note the argument against lotto incomes for states — it’s not the “morality” but the inequality:

Lotteries, by and large, are a tax on the poor, study after study has shown. North Carolina Watch did a study of lottery ticket sales in that state’s 100 counties and found that per capita revenue was highest in 19 of the 20 poorest counties.

The lottery is, for sure, a voluntary tax. But it is still mostly a tax on the poor.

A tax on the poor driven by fear and desperation. (Not bad for the lotto companies, however; I wonder how it works, getting a state-sanctioned gambling contract through our corruption-free state legislatures.)

If you want to argue the immorality of lotteries, I think this makes a fine starting point:

Lotteries in most places, including California and North Carolina, were sold on the basis that they would provide more money for education. Prof. Ross Rubenstein at Syracuse University’s Maxwell School, who studies education finance, said there is robust evidence that lottery revenue tends to supplant, not supplement, tax dollars going to education.

I’ve just scratched the surface of this good article, and David Cay Johnston is one of our national treasures. From deeper in the piece, these gems:

The corporate income tax situation in Oregon, where many companies pay nominal amounts, is part of a broader trend as well. This is a state in which officials are poised to let Warren Buffett pocket taxes embedded in rates paid to his electric utility[.] … Nationally, corporate income taxes have fallen to some of their lowest levels as a share of GDP ever. … The average share of corporate income taxes since 1971 has been 2 percent, the CBO data show.

So much for that supposed “35% corporate tax rate” the CNBC blond(e)s complain about. David Cay Johnston at his best.

Speaking anecdotally about the lottery, it sure seems to me that the big numbers — the $100 million pools and up — for the multi-state lotteries are coming faster and faster, at an alarming rate. If lottos are constructed so that incoming purchases drive the top-prize number (and I believe that’s the case), people must be buying tickets at a fearsome rate.

If that’s a measure of people’s economic self-assessment in this jobless “recovery,” you could almost predict a double-dip recession from that metric alone. Scary.


Gaius Publius is a professional writer living on the West Coast of the United States.

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