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The Cross Effects of Lottery Taxes On Alternative State Tax Revenue

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Author Info

  • Mary O. Borg

    (University of North Florida)

  • Paul M. Mason

    (University of North Florida)

  • Stephen L. Shapiro

    (University of North Florida)

Abstract

This article both theoretically and empirically identifies sizable cross effects of lottery taxes on other sources of state tax revenue. Specifically, those states without income taxes and those with high sales and excise tax rates may lose as much as 23 cents in alternative state revenue for every dollar of lottery revenue they collect. Even though this extreme still implies that the state receives 77 cents more tax revenue than before the lottery was imposed, those states that earmark their lottery dollars likely see significant reductions in their nonlottery revenue sources that need to be accounted for in their budgets. Otherwise, a bonanza in one area of the budget causes a sizable and likely unexpected shortfall elsewhere.

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File URL: http://pfr.sagepub.com/content/21/2/123.abstract
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Bibliographic Info

Article provided by in its journal Public Finance Review.

Volume (Year): 21 (1993)
Issue (Month): 2 (April)
Pages: 123-140

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Handle: RePEc:sae:pubfin:v:21:y:1993:i:2:p:123-140

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Cited by:
  1. Melissa Schettini Kearney, 2002. "State Lotteries and Consumer Behavior," NBER Working Papers 9330, National Bureau of Economic Research, Inc.
  2. Andrew C. Worthington & Kerry Brown & Mary Crawford & David Pickernell, 2003. "Socioeconomic And Demographic Determinants Of Household Gambling In Australia," School of Economics and Finance Discussion Papers and Working Papers Series 156, School of Economics and Finance, Queensland University of Technology.
  3. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
  4. Andrew Worthington & Kerry Brown & Mary Crawford & David Pickernell, 2007. "Gambling participation in Australia: findings from the national Household Expenditure Survey," Review of Economics of the Household, Springer, vol. 5(2), pages 209-221, June.
  5. Thomas A. Garrett & Cletus C. Coughlin, 2007. "Inter-temporal differences in the income elasticity of demand for lottery tickets," Working Papers 2007-042, Federal Reserve Bank of St. Louis.
  6. Stephen Fink & Alan Marco & Jonathan Rork, 2004. "Lotto nothing? The budgetary impact of state lotteries," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2357-2367.
  7. Thomas A. Garrett, 2011. "A closer look at the tax incidence of instant lottery games: an analysis by price point," Working Papers 2011-010, Federal Reserve Bank of St. Louis.
  8. Thomas A. Garrett & Natalia Kolesnikova, 2010. "Local price variation and the tax incidence of state lotteries," Working Papers 2010-035, Federal Reserve Bank of St. Louis.
  9. Melissa S. Kearney, 2005. "The Economic Winners and Losers of Legalized Gambling," NBER Working Papers 11234, National Bureau of Economic Research, Inc.

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