Tags: Sin | States | vice | Taxes

Cashing in on Sin: States Profit as Vice Taxes Rise

By    |   Friday, 28 Oct 2011 01:44 PM

Federal and state governments annually rake in $96 billion in sin taxes from Americans’ appetites for easy money, nicotine and booze, the Washington Times reported, adding that this figure is set to rise as cash-strapped government officials seek new money sources in a struggling economy.

Sin taxes are applied to products or actions deemed socially undesirable, such as gambling, smoking, drinking and even consuming sugary drinks and fattening junk food, the Washington Times explains.

A Reuters blog post said in 11 states, lotteries provided more revenue than the state corporate income tax in 2009, according to Tax Foundation data.
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Some critics argue that governments have developed as much of a dependency on these revenues as consumers have to the activities that finance them.

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(Associated Press photo)
Maggie Hassan, former Democratic New Hampshire Senate majority leader, provides a glimpse into the mentality of those who view sin tax as money in the bank. Now running for governor, Hassan wants her state needs to be open to gambling as a possible revenue stream.

“With Massachusetts very likely to support gambling and building casinos, I think it’s worth taking a look at whether we should have at least one gambling location," she said.

"Because, otherwise, what's going to happen is people will go over the border into Massachusetts and spend their money there, funding Massachusetts roads, bridges and schools with their gambling money, and then come back to New Hampshire with the same social problems gambling sometimes causes,” she told the SeaCoast Online.

Hassan's statement highlights one of the criticisms of these so-called sin taxes — they are supposed to be a means of deterrence. Governments are increasingly looking to leach more money off bad habits, but some argue that an alcoholic, for example, would not be discouraged from drinking due to taxes on alcohol.

Also concerning to some are claims that these sin taxes tend to disproportionately be paid by lower-income consumers.

Tim Haab, a professor of developmental economics at Ohio State University, noted in a recent analysis that tax collectors are exploiting the fact that smokers, drinkers and gamblers tend not to cut back on their vices, even with higher taxes.

“So-called sin taxes don’t reduce the sin, they raise the revenue,” the Washington Times quoted him as saying.

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Federal and state governments annually rake in $96 billion in sin taxes from Americans appetites for easy money, nicotine and booze, the Washington Times reported, adding that this figure is set to rise as cash-strapped government officials seek new money sources in a...
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2011-44-28
Friday, 28 Oct 2011 01:44 PM
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