St Peter’s , photo from Flickr
Some cynic wrote “Whoever robs Peter to pay Paul can always count on Paul’s support.” Too many people, though they might hesitate to call gambling robbery, are comfortable with government’s taking gambling-derived revenues from Peter (the gambler) and converting them into what looks like a fiscal benefit to Paul. Paul here is the citizen whose tax rates were not perceptibly increased when government got revenue another way, from its share of Peter’s losses at legalized gambling. Paul is expected to be grateful for government’s easing up on him thanks to Peter’s losses. To feel that way in good conscience, though, he has to think it’s really not “robbery,” merely “parting a fool from his money.”
In NY we are most all Pauls, thanking government for fending off tax rate increases by reaping Lottery money. There are two things wrong with this state of affairs that should make us change it, hard as that would be. First, about half the revenue to government from gambling it sanctions is from the losses of addicted and problem gamblers. To keep “playing,” these people almost always have to take money from others who trust them. Whether predatory gambling literally robs the gambler himself or herself can be disputed. (See discussion below the “read more” break.) That it robs others via the gambler cannot be disputed. It robs them not only of savings accounts, vehicles, retirement funds, lunch money, furniture etc., but of reputation, affection and self-esteem. These others number, for each affected gambler, as many as 10 to 17 [Politzer et al, 1992 citing Lesieur 1977].
Then there is robbery going on to keep Paul’s tax rate from rising. Paul can still be comfortable with that, if the identity of the victims is abstract enough. He ought also to realize, however, that he is not really benefiting by the apparent flatness of his tax rate. The money Peter cozened from his trusting family and associates (referred to as “abused dollars”) are only a piece of the hidden quantifiable socioeconomic costs of gambling. Counting in all those hidden costs doubles what it costs society to raise a dollar by tax-on-casino instead of by stepping up the rate of a conventional distortionary tax like sales tax or income tax. [Earl Grinols (2004), Gambling in America pp 180-181]
If Paul feels no compunction about seeming to get a break on his taxes due to revenue to government from gambling, still insists it’s a free lunch, it’s not. He gave at the office without knowing it. Some of his tax money went to criminal justice administration or social services triggered by events in the gambling exchange. He is also part of an economy hurt by lost productivity and lost creativity due to gambling. This is a touch of rot. Continue reading