Monday, February 20, 2006
Slot Machine Revenue Worth The Cost?
Monday's Globe reported that slot machine supporters are closer than ever to bringing thousands of new machines to our state. Last fall the Senate voted in favor of the machines, and the House members who support the legislation will be joined by racetrack owners and local mayors in the effort to convince their colleagues to back it. A House victory is even more likely now that Northeastern's own Tom Finneran has departed as Speaker, because Finneran had bullied members to oppose the slots.
So is this good news or bad news?
The positives are clear enough: millions of dollars injected into local economies that need it, and about $350 million per year in revenue to the state budget, plus $100 million in start up fees. Now that the state has corrected the distribution of lottery funds to local governments, this windfall would presumably benefit local governments and their schools, and it is very hard to argue against that kind of money being spent on education.
Unfortunately the machines aren't printing the State checks. Nope, the money comes from people. The problem is that these are not the type of people you want to take $350 million a year from.
First of all, they are from Massachusetts. Las Vegas rakes in millions from out-of-staters, but no one is flying in to Taunton to play slots at a race track. The first rule of taxing might be, "Don't tax your own people, if you can avoid it."
The second problem is that slot machines are essentially like scratch tickets: you don't play them for entertainment (though surely most enjoy playing on some level), you play to make money. This means that the people who play often cannot afford to. Massachusetts should not be in the business of encouraging fixed-income senior citizens, say, to desperately drop $500 in a few hours.
So what we have here is a regressive tax on exactly those whose tax burdens most legislators seek to relieve. It's cleverly disguised as entertainment, but it acts just like a tax. Looking for creative sources of new revenue is a great idea, but in this case "creative" just means "politically easier."
There is no doubt that $350 million dollars a year could be put to great use in Massachusetts, and the State would be well served by legislators willing to raise taxes honestly instead of looking for creative ways to deceive those footing the bill.
So is this good news or bad news?
The positives are clear enough: millions of dollars injected into local economies that need it, and about $350 million per year in revenue to the state budget, plus $100 million in start up fees. Now that the state has corrected the distribution of lottery funds to local governments, this windfall would presumably benefit local governments and their schools, and it is very hard to argue against that kind of money being spent on education.
Unfortunately the machines aren't printing the State checks. Nope, the money comes from people. The problem is that these are not the type of people you want to take $350 million a year from.
First of all, they are from Massachusetts. Las Vegas rakes in millions from out-of-staters, but no one is flying in to Taunton to play slots at a race track. The first rule of taxing might be, "Don't tax your own people, if you can avoid it."
The second problem is that slot machines are essentially like scratch tickets: you don't play them for entertainment (though surely most enjoy playing on some level), you play to make money. This means that the people who play often cannot afford to. Massachusetts should not be in the business of encouraging fixed-income senior citizens, say, to desperately drop $500 in a few hours.
So what we have here is a regressive tax on exactly those whose tax burdens most legislators seek to relieve. It's cleverly disguised as entertainment, but it acts just like a tax. Looking for creative sources of new revenue is a great idea, but in this case "creative" just means "politically easier."
There is no doubt that $350 million dollars a year could be put to great use in Massachusetts, and the State would be well served by legislators willing to raise taxes honestly instead of looking for creative ways to deceive those footing the bill.
