Affluent people don’t play the lottery. Poor people do. Analysis after analysis has shown a clear relationship between lottery sales per person and the income level of local communities: The poorer the community, the higher the per-person sales. An analysis of the New Jersey Lottery, for example, showed that residents in the poorest communities spend $306 per person on the lottery in a year. The amount spent per person declined steadily as the income brackets went up. The wealthiest residents spent only $89 per person in a year.
The poorest neighborhoods also have the highest number of lottery retailers, according to the same analysis. There were 4.1 lottery retailers per 5,000 residents in the poorest local community, with the number declining steadily as income levels increased. There were only 1.4 lottery retailers in the richest neighborhoods.
This is why tax economists call the lottery a regressive tax. Poorer people pay a higher share of their incomes than richer people do. The sales tax is another example of a regressive tax.
But in one way it’s not a tax: You don’t have to pay it. That is, you don’t have to buy a lottery ticket.
That’s why I call the lottery the tax we love. It’s voluntary, no one complains about it anymore, and the rich—who often say they are unfairly taxed—don’t pay this one.
Do think it’s correct to think of the lottery as a tax?
Does it matter that it is, in effect, a regressive tax?
Do you love it?
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Originally published at www.OurValues.org, an online experiment in civil dialogue.