"The State Lottery Tax: An Equity Analysis" by Ben Smith

Article Title

The State Lottery Tax: An Equity Analysis

Authors

Ben Smith, University of Northern Iowa

Document Type

Article

Abstract

This paper finds the state lottery tax to be vertically inequitable. The tax is inherently regressive, meaning poorer income classes spend a larger share of their income on lottery products than higher income classes. The paper also finds the lottery tax to be horizontally inequitable. Older people, males, less educated individuals, and minorities (except Asians) all tend to spend more on lottery products than their respective counterparts. Policy makers should lower the implicit tax rate from its current level of 44% to 19%. A decrease in the tax rate will increase state revenue, increase consumer surplus, possibly stimulate the economy, and decrease the inequities outlined above.

Publication Date

Spring 2002

Journal Title

Major Themes in Economics

Volume

Issue

First Page

Last Page

Copyright

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Language

File Format

application/pdf

Recommended Citation

Smith, Ben (2002) "The State Lottery Tax: An Equity Analysis," Major Themes in Economics, 4, 1-19.
Available at: https://scholarworks.uni.edu/mtie/vol4/iss1/3