Why I Oppose a State Lottery
On Thursday August 23rd Governor Bryant called the Mississippi legislature into special session to address funding repairs of Mississippi's roads and bridges. This issue has been discussed and debated for three years without a solution to the problem. The first issue to be addressed is whether our state is truly suffering from an emergency of road disrepair. The facts do not actually support that we have an emergency situation. Mississippi's state highways are rank 11th in the nation for road quality, that is not an emergency. The fact is our Mississippi Department of Transportation is actually doing a good job with the money we provide.
There is a need for shifting our spending away from building new roads to maintaining and repairing our current highway structure. There is also evidence that suggest many of our county roads and bridges are in need of repair. The "emergency" situation is a result of local governments not spending your local tax dollars wisely. (I will add here, Desoto County and the municipalities in our county have no closed bridges or roads)
In the special legislative session we are discussing two possible ways to increase funding to local municipalities and counties so they will have the money needed to address their crumbling roads and bridges. The first is diverting a portion of the online sales (use) tax to local governments. This is a plan that I support provided the legislation is not filled with wasteful borrowing and spending, which it is in its current form. (More on this issue later)
The second way to address this issue is by the state of Mississippi creating a lottery. There are a lot of folks in our state who seem to be salivating over this possibility. I am convinced that if we implement a lottery someone in our state will be getting rich, but it will not be any of us who are buying tickets.
Below is some information offered on the wisdom of a lottery and a list of resources that I have used to draw my conclusions:
The Lottery is a tax
- "As Mississippi policymakers contemplate a lottery, it may be tempting to think of it as free money - new revenue raised without having to adopt a new tax. A better way of thinking about the issue, however, would be recognizing the lottery for what it is: a regressive form of high simplicity taxation." Mississippi Lawmakers Consider a State Lottery, Jared Walczak, Tax Foundation, January 10, 2018
- "The state lottery is a tax, which is to say it is forced wealth redistribution." Mises Institute, The Lottery Tax, Mark Thornton, economist Auburn University
- "The lottery is a tax that falls mostly on the working poor, albeit voluntarily." Fred Thompson, Professor of public management, Willamette University, as reported by David Cay Johnson, a Reuters columnist.
The Lottery grows the size of government, contrary to Republican philosophy
- "Lottery stakeholders should have good understanding that a lottery operation has a profit motive." Mississippi House of Representatives Lottery Working Group Report ("The Report"), p. 11
- "The lottery is typically utilized by states to promote spending on programs that are above normal budget levels with, on average, only 23% of lottery revenue going toward current spending." In other words a lottery grows the size of government by 77%
- "A proposal to establish a state lottery does not cut taxes, it increases tax revenues. It does not control or cut spending, it creates a large increase in government expenditures." The Economic Benefits of an Alabama State Lottery, Dr. Mark Thornton, Economist Auburn University.
- Implementing a lottery for the purpose of raising more revenue to spend is contrary to Republican philosophy of controlling spending and limiting the size of government.
- It is expanding the size of government, not reducing it.
The lottery does not prevent money from leaving the state.
- "If lottery sales reach $338 million, we believe the leakage created by a Mississippi lottery will be approximately $74 million. The leakage increases with lottery sales - the more lottery tickets sold the higher the leakage out of state... (Currently) total existing lottery sales to Mississippians by neighboring states are roughly $70 million annually. The leakages from a Mississippi lottery is, then, slightly higher than the leakage from lottery purchases currently made by Mississippians." See report of state economist Darrin Webb, Appendix B to The Report, p. 22
A lottery is funded by the poor
- I believe every individual as the right to make their own decisions and this includes the right to make poor financial decisions. But, I do not believe the state should invest resources into promoting those poor decisions. A Mississippi lottery means the State will be investing in and encouraging individuals who have limited incomes to make poor financial decisions.
- The economic literature almost unanimously finds lotteries are regressive for those who play; that is, lower income individuals spend a larger percentage of their total income on lotteries that higher income individuals. Moreover surveys have found lottery participants in lower income brackets spend more total dollars per year on lottery purchases that participants in higher income brackets.
- My objection is not based on the government protecting the poor from making bad financial decisions but it is an objection to the government promoting and encouraging those bad decisions.
The lottery works to decrease sales and excise taxes
- "(The Lottery) has been shown to decrease sales and excise taxes by an average of 8-10 cents per lottery dollar gained." The Report, p. 12
Jared Walckak, Economist, Tax Foundation
Mark Thornton, Economist, Auburn University
Fred Thompson, Professor of Public Management, Williamette Universtiy
Darrin Webb, State Economist, Mississippi
Bob Terry, Ethics and Religious Liberties Commission
Dina Spector, Gus Lubin, and Michael B. Kelly, corespondents for Business Insider
Emily Paisley, doctoral student, Carnegie Mellon Study
Michael Heberling, President Baker College Center for Graduate Studies