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May 26, 2005
Gambling and Politics
In 2002, Pennsylvania Governor Ed Rendell included in his election campaign a plan to legalize slot machines in the state and use the revenue to fund property tax cuts for homeowners. The initiative passed last summer. Slot machine parlors will soon be operating in the state that began as William Penn's "holy experiment". Unfortunately, as this AP article reports, property tax relief may be seen by only a small minority of homeowners.
Under the plan--known as Act 72--in order to receive a share of gambling revenues, school districts must institute or raise (by at least 0.1%) their local earned income tax and must seek voter approval for future property tax hikes above the rate of inflation. With the deadline for making the decision approaching, only 25% of school districts have opted into the plan.
This may be disappointing, but it's hardly surprising. Legalizing gambling in the interest of liberty is one thing, but doing so for tax revenue is often a short-sighted decision. A 2004 study in Nova Scotia cited evidence that "the government's estimate of gambling profits may be illusory, because it does not account for the higher health care, justice, social service, productivity loss, and other costs generated by problem gambling." Furthermore, obtaining state funding from state-licensed gambling--just like state lotteries--is a form of regressive taxation that most hurts those who can least afford to gamble, yet do so out of hope that a windfall will lift them out of their financial situation.
Granted, the immediate reason Rendell's promise of tax relief may not come to fruition is not because of gambling's social costs. School districts just don't want to give up their power of taxation. But it just adds another mark against "gambling for revenue" schemes. (For more research about gambling, see the report of the National Gambling Impact Study commission.)
In other Pennsylvania political news, ex-Pittsburgh Steelers wide receiver Lynn Swann is considering running against Rendell for governor in 2006. For those wondering whether his role as an ABC Sports commentator will give Swann an unfair advantage, fear not. Gov. Rendell is featured every week during the NFL season on a Philadelphia Eagles post-game show on a regional cable network--an endeavor he began as mayor of Philly and has continued as governor.
Posted by Eric Seymour at May 26, 2005 12:25 PM
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