The tax incidence of lotteries: Evidence from five states
Article
Hansen, A, Miyazaki, AD, Sprott, DE. (2000). The tax incidence of lotteries: Evidence from five states
. JOURNAL OF CONSUMER AFFAIRS, 34(2), 182-203. 10.1111/j.1745-6606.2000.tb00090.x
Hansen, A, Miyazaki, AD, Sprott, DE. (2000). The tax incidence of lotteries: Evidence from five states
. JOURNAL OF CONSUMER AFFAIRS, 34(2), 182-203. 10.1111/j.1745-6606.2000.tb00090.x
The nature of revenue generation for state-sponsored lotteries has been an issue of public debate for quite some time. Although most studies have found lotteries to have a regressive tax incidence, several have concluded otherwise. Unfortunately, the vast majority of academic studies address this concern by examining the tax incidence of only one state's lottery and/or by using only one time period's data. In addition, many assessments of the tax impact of lotteries fail to consider other demographic variables that may influence purchase patterns and, thus, be of interest to policy-makers. To remedy this, the current paper assesses the incidence of the lottery excise tax for five states using county level data spanning multiple years. Also assessed arc changes in incidence across demographic groups as the lotteries matured. Lottery tax incidence is assessed with multiple regression estimates of the income elasticity of demand for lottery products. The predominant finding is that the lottery tax for these states had a regressive incidence. Otherwise, few consistencies in either change in lottery tax incidence or purchase patterns across demographic variables were found. Copyright 2000 by The American Council on Consumer Interests.
