5 ms·

Lottery = Poor People Tax and should be removed from Government. http://www.businessinsider.com/lottery-is-a-tax-on-the-poor-2012-4 http://www.businessinsider.

by baldfat 11y ago

Lottery = Poor People Tax and should be removed from Government. http://www.businessinsider.com/lottery-is-a-tax-on-the-poor-2012-4 http://www.businessinsider.com/lottery-is-a-tax-on-the-poor-...

Nicholas_C 11y ago
At least the revenue generated from the lottery (in Texas, not sure about other states) go to pay for education.
- larrydag 11y ago
  Texas resident here. That claim is dubious. http://www.kcbd.com/story/14579932/kcbd-investigates-is-the-tx-lottery-really-funding-education http://www.kcbd.com/story/14579932/kcbd-investigates-is-the-...
- harryh 11y ago
  Really? Or does it just mean that money from general taxes that would have been spent on education is spent on something else?
  - pc86 11y ago
    It's both. Lottery money replaced other tax revenue, which freed that revenue to be either a) returned to the people in the form of lower taxes; or b) spent on other projects. You'd need to look at when the lottery proceeds were first used for education and track the changes since to know which one actually happened.
    - eli 11y ago
      Either way, isn't that exactly the same as saying lottery money goes into a general fund just like other taxes?
      - Karunamon 11y ago
        This sort of frame of reference juggling can be used to say any money is used for any purpose anywhere. Most lottery money is earmarked for education, infrastructure improvement, etc. The effect it has on any other portion of the budget notwithstanding - it's a fact that lotteries bring in substantial amounts of income.
        eli 11y ago
        Yes, that's my point. Money is fungible, so the lottery is effectively just a general tax and benefits all things that are paid for by taxes, not just school children.
        Karunamon 11y ago
        Not if the money is earmarked - you're making an unstated assumption that, say, if 5M is going into education, and a lottery starts up and brings in 5M more for a total of 10M, that the original 5M must be repurposed elsewhere. That's not necessarily true in the first place, and what's more it depends on the appropriations rules in the jurisdiction.
        eli 11y ago
        I'm making that assumption because I saw exactly that happen in New York. The lottery money is earmarked, sure, but it simply replaces money that otherwise would have been allocated from the general fund. You could just as well earmark the lottery money for sanitation, cut the sanitation budget, and then put the money towards schools or other uses.
        deleted 11y ago
        [deleted]
        Karunamon 11y ago
        And the other 49 states and DC/PR? Once again - what you're implying happens in all cases doesn't necessarily happen in all cases. That's literally my whole point :)
- Jtsummers 11y ago
  GA and FL as well. The problem, though, is that some states replaced instead of supplemented education funding with lottery revenues. So what could've been a nice boon (normal budget $xx million/year, with lottery add $yy million/year) meant that nothing actually changed (for education). It may, depending on the state, have freed up tax revenue to go to other projects.
  - TylerE 11y ago
    Of course that's how it works. That's how it always works. Any political promise of "Raise $xxx million for $y" is easily ignorable because money is fungible.
- baldfat 11y ago
  It is well documents that lottery income replaces standard taxes and does not increase the money spent of education or senior citizens. So it has switched taxing all tax payers and puts the burden on people who play the lottery, which are vastly made up of the poor population of the states. http://taxvox.taxpolicycenter.org/2014/09/09/nearly-states-play-lottery-none-big-winners/ http://taxvox.taxpolicycenter.org/2014/09/09/nearly-states-p...
  - datamingle 11y ago
    You can't remove demand by Government decree. We have tried that with alcohol, drugs, etc. It never works.
    - asddubs 11y ago
      it's a lot harder to run an illegal lottery at any meaningful scale, though
    - baldfat 11y ago
      Government isn't selling drugs and only a few states still sell alcohol. Government shouldn't sell Cigarettes, Alcohol, Drugs or Lottery.
larrydag 11y ago
My favorite definiton of the lottery = a tax on the innumerate. I wish I could claim that.
balabaster 11y ago
Poor people or people that don't mind taking a risk for the chance of a reward? I know fairly wealthy people that still dabble on the lottery. They well aware that the odds are stacked against them and many of them can quote the statistical probability of their making (or not making) a profit on their play, but they still gamble because a). it's amusing and b). because just maybe they'll get lucky and will get a bazillion percent return on their investment - plus, the amount they spend on the lottery is totally meaningless to them. Eventually you get to a point where the $5 (or whatever it costs) is so trivial it makes zero difference in your life, so why not, right? It's not really that much unlike Venture Capitalists. 95% of startups fail, yet they still get VCs clamoring to invest in them every year because 5% of them may pay off a windfall return. VCs are no slouches in finances; they're sharp, quick witted, ruthless hustlers, yet still they play this lottery. I would say that the lottery is less a tax on the poor than it is a tax on those that are either ignorant to the math, aren't risk averse or are well off enough that the cost of playing the lottery is much less meaningful to their bottom line than the potential win would be. After all, at least 1 person wins it most weeks, and every play has an equal chance of being a winner - why not you? I'll spend my $5 on ice cream, because I'd rather do something that will definitely make me feel good now than spend $5 buying a piece of paper that will most probably be garbage in a few hours and make me feel like I wasted the money - in the hope that just perhaps I'll get rich and never have to worry about anything again, supposedly; though, I guess it's no different than people supporting the Leafs, hoping every week that their team will win, only to get crushed when they lose...again. Given they're (allegedly, according to their fans) the richest team in the NHL despite consistently sucking, it would appear that hope is a trillion dollar industry, find a way to sell hope to everyone and you'll make your own windfall.
- ncallaway 11y ago
  The entire point of being a VC is that the Expected Value should be greater than the investment. If a VC generates the same return as investments in the lottery, that VC would quickly cease operations.
  - balabaster 11y ago
    Yes, but every VC knows that it's still a gamble that may not, and probably won't pay off. They spread their risk across many startups in order to minimize losses that are covered by huge windfalls the come from the big winners. At the end of the day though, it's still a gamble. They could end up losing it all.
learnstats2 11y ago
Being negative EV does not make it an irrational decision or a tax. A lottery win, unlikely as it is, could be the only way that poor people can change their life circumstances. What's my chance to buy a house or retire comfortably from the savings on minimum wage with no existing assets? What's my chance by spending some of my disposable income playing the lottery? Framed this way, it's understandable. And perhaps it's preferable that the government runs it, rather than someone acting unethically. Commerce (and mafia) know they can afford to run a less fair or reliable lottery than government normally chooses to, and empirically, that's what they do. The government should rather put in place support and security, acting to reduce systematic inequality, so that poor people don't have to resort to unfair lotteries as their only financial solace. [0]https://en.wikipedia.org/wiki/Numbers_game https://en.wikipedia.org/wiki/Numbers_game
- LordKano 11y ago
  It's been my understanding that the local bookie is slightly better than the state for small time gambling. Meaning, on the three digit lottery drawing, the state pays 500 to 1 on a game where the odds of winning are 1000 to 1. In order to be the more attractive alternative to the state lottery, bookies pay 600 to 1. For the small time payouts, I'd trust that the bookie's desire to keep the bets rolling in will be inducement enough to pay. They operate in small circles and word would spread quickly if a bookie refused to pay someone who had legitimately won.
  - learnstats2 11y ago
    > In order to be the more attractive alternative to the state lottery, bookies pay 600 to 1. I don't disagree with you, but I would modify my claim of empiricism to mean "in the absence of a state lottery". There's more than one reason the bookmaker ought to be more generous, which relate to the benefit of state backing: you can be sure the rake is not going to be used for the public good, and if the bookmaker takes heavy losses and bankrupts, you can't be sure you'll get your big win even after beating the odds. See also e.g. http://www.bbc.co.uk/news/uk-england-29543448 http://www.bbc.co.uk/news/uk-england-29543448 You can be sure the casino wouldn't have cared to comment on Phil Ivey's methods until they were facing a significant net loss. Would they have returned his stake if he was unlucky enough to make a loss? Would they have bothered to sue if he had won a small amount? He suffers here also for the extent of his luck.

by baldfat 11y ago

Lottery = Poor People Tax and should be removed from Government. http://www.businessinsider.com/lottery-is-a-tax-on-the-poor-2012-4 http://www.businessinsider.com/lottery-is-a-tax-on-the-poor-...

Nicholas_C 11y ago

At least the revenue generated from the lottery (in Texas, not sure about other states) go to pay for education.

larrydag 11y ago
Texas resident here. That claim is dubious. http://www.kcbd.com/story/14579932/kcbd-investigates-is-the-tx-lottery-really-funding-education http://www.kcbd.com/story/14579932/kcbd-investigates-is-the-...
harryh 11y ago
Really? Or does it just mean that money from general taxes that would have been spent on education is spent on something else?
- pc86 11y ago
  It's both. Lottery money replaced other tax revenue, which freed that revenue to be either a) returned to the people in the form of lower taxes; or b) spent on other projects. You'd need to look at when the lottery proceeds were first used for education and track the changes since to know which one actually happened.
  - eli 11y ago
    Either way, isn't that exactly the same as saying lottery money goes into a general fund just like other taxes?
    - Karunamon 11y ago
      This sort of frame of reference juggling can be used to say any money is used for any purpose anywhere. Most lottery money is earmarked for education, infrastructure improvement, etc. The effect it has on any other portion of the budget notwithstanding - it's a fact that lotteries bring in substantial amounts of income.
      - eli 11y ago
        Yes, that's my point. Money is fungible, so the lottery is effectively just a general tax and benefits all things that are paid for by taxes, not just school children.
        Karunamon 11y ago
        Not if the money is earmarked - you're making an unstated assumption that, say, if 5M is going into education, and a lottery starts up and brings in 5M more for a total of 10M, that the original 5M must be repurposed elsewhere. That's not necessarily true in the first place, and what's more it depends on the appropriations rules in the jurisdiction.
        eli 11y ago
        I'm making that assumption because I saw exactly that happen in New York. The lottery money is earmarked, sure, but it simply replaces money that otherwise would have been allocated from the general fund. You could just as well earmark the lottery money for sanitation, cut the sanitation budget, and then put the money towards schools or other uses.
        deleted 11y ago
        [deleted]
        Karunamon 11y ago
        And the other 49 states and DC/PR? Once again - what you're implying happens in all cases doesn't necessarily happen in all cases. That's literally my whole point :)
Jtsummers 11y ago
GA and FL as well. The problem, though, is that some states replaced instead of supplemented education funding with lottery revenues. So what could've been a nice boon (normal budget $xx million/year, with lottery add $yy million/year) meant that nothing actually changed (for education). It may, depending on the state, have freed up tax revenue to go to other projects.
- TylerE 11y ago
  Of course that's how it works. That's how it always works. Any political promise of "Raise $xxx million for $y" is easily ignorable because money is fungible.
baldfat 11y ago
It is well documents that lottery income replaces standard taxes and does not increase the money spent of education or senior citizens. So it has switched taxing all tax payers and puts the burden on people who play the lottery, which are vastly made up of the poor population of the states. http://taxvox.taxpolicycenter.org/2014/09/09/nearly-states-play-lottery-none-big-winners/ http://taxvox.taxpolicycenter.org/2014/09/09/nearly-states-p...
- datamingle 11y ago
  You can't remove demand by Government decree. We have tried that with alcohol, drugs, etc. It never works.
  - asddubs 11y ago
    it's a lot harder to run an illegal lottery at any meaningful scale, though
  - baldfat 11y ago
    Government isn't selling drugs and only a few states still sell alcohol. Government shouldn't sell Cigarettes, Alcohol, Drugs or Lottery.

larrydag 11y ago

My favorite definiton of the lottery = a tax on the innumerate. I wish I could claim that.

balabaster 11y ago

Poor people or people that don't mind taking a risk for the chance of a reward? I know fairly wealthy people that still dabble on the lottery. They well aware that the odds are stacked against them and many of them can quote the statistical probability of their making (or not making) a profit on their play, but they still gamble because a). it's amusing and b). because just maybe they'll get lucky and will get a bazillion percent return on their investment - plus, the amount they spend on the lottery is totally meaningless to them. Eventually you get to a point where the $5 (or whatever it costs) is so trivial it makes zero difference in your life, so why not, right? It's not really that much unlike Venture Capitalists. 95% of startups fail, yet they still get VCs clamoring to invest in them every year because 5% of them may pay off a windfall return. VCs are no slouches in finances; they're sharp, quick witted, ruthless hustlers, yet still they play this lottery. I would say that the lottery is less a tax on the poor than it is a tax on those that are either ignorant to the math, aren't risk averse or are well off enough that the cost of playing the lottery is much less meaningful to their bottom line than the potential win would be. After all, at least 1 person wins it most weeks, and every play has an equal chance of being a winner - why not you? I'll spend my $5 on ice cream, because I'd rather do something that will definitely make me feel good now than spend $5 buying a piece of paper that will most probably be garbage in a few hours and make me feel like I wasted the money - in the hope that just perhaps I'll get rich and never have to worry about anything again, supposedly; though, I guess it's no different than people supporting the Leafs, hoping every week that their team will win, only to get crushed when they lose...again. Given they're (allegedly, according to their fans) the richest team in the NHL despite consistently sucking, it would appear that hope is a trillion dollar industry, find a way to sell hope to everyone and you'll make your own windfall.

ncallaway 11y ago
The entire point of being a VC is that the Expected Value should be greater than the investment. If a VC generates the same return as investments in the lottery, that VC would quickly cease operations.
- balabaster 11y ago
  Yes, but every VC knows that it's still a gamble that may not, and probably won't pay off. They spread their risk across many startups in order to minimize losses that are covered by huge windfalls the come from the big winners. At the end of the day though, it's still a gamble. They could end up losing it all.

learnstats2 11y ago

Being negative EV does not make it an irrational decision or a tax. A lottery win, unlikely as it is, could be the only way that poor people can change their life circumstances. What's my chance to buy a house or retire comfortably from the savings on minimum wage with no existing assets? What's my chance by spending some of my disposable income playing the lottery? Framed this way, it's understandable. And perhaps it's preferable that the government runs it, rather than someone acting unethically. Commerce (and mafia) know they can afford to run a less fair or reliable lottery than government normally chooses to, and empirically, that's what they do. The government should rather put in place support and security, acting to reduce systematic inequality, so that poor people don't have to resort to unfair lotteries as their only financial solace. [0]https://en.wikipedia.org/wiki/Numbers_game https://en.wikipedia.org/wiki/Numbers_game

LordKano 11y ago
It's been my understanding that the local bookie is slightly better than the state for small time gambling. Meaning, on the three digit lottery drawing, the state pays 500 to 1 on a game where the odds of winning are 1000 to 1. In order to be the more attractive alternative to the state lottery, bookies pay 600 to 1. For the small time payouts, I'd trust that the bookie's desire to keep the bets rolling in will be inducement enough to pay. They operate in small circles and word would spread quickly if a bookie refused to pay someone who had legitimately won.
- learnstats2 11y ago
  > In order to be the more attractive alternative to the state lottery, bookies pay 600 to 1. I don't disagree with you, but I would modify my claim of empiricism to mean "in the absence of a state lottery". There's more than one reason the bookmaker ought to be more generous, which relate to the benefit of state backing: you can be sure the rake is not going to be used for the public good, and if the bookmaker takes heavy losses and bankrupts, you can't be sure you'll get your big win even after beating the odds. See also e.g. http://www.bbc.co.uk/news/uk-england-29543448 http://www.bbc.co.uk/news/uk-england-29543448 You can be sure the casino wouldn't have cared to comment on Phil Ivey's methods until they were facing a significant net loss. Would they have returned his stake if he was unlucky enough to make a loss? Would they have bothered to sue if he had won a small amount? He suffers here also for the extent of his luck.