Not Taking The Gamble In PA

Today's New York Times reports that Pennsylvania Governor Edward Rendell's plan for providing property tax relief with state sponsored gambling revenue is pretty much dead in the water. This is great news for progressive tax policy advocates.

Yes, Pennsylvania residents could use relief from their property taxes. But no, property tax relief should not be provided for by using a regressive and socially questionable revenue scheme - such as state sponsored gambling:

1. Even if gambling boosts state revenues, competition from other states would diminish the returns in the long-run and Pennsylvania will be right back where it started. This is a serious consideration given that neighboring state Maryland is also considering slots.
2. Instead of increasing overall state revenue, gambling may simply shift money from one tax source to another with no net gain. When consumers spend more money on one activity, such as gambling, they'll spend less on another activity, such as clothes shopping - which contributes to sales tax revenue. This would mean an increase in gambling revenue could result in a decrease in sales tax revenue.
3. State sponsored gambling requires states to encourage gambling and all the negative social implications that can occur such as increased crime, decreased private savings and exploitation of those who suffer from compulsive gambling.
4. Low-income and poorly-educated taxpayers are more likely to use slot machines that wealthier, better educate taxpayers which makes this form of state revenue generation regressive.

If Governor Rendell and other Pennsylvania lawmakers are interested in providing property tax relief, there are more progressive and socially less-questionable methods.

For more on the policy implications of state sponsored gambling, be sure to read ITEP's Policy Brief, "Uncertain Benefits, Hidden Costs: The Perils of State-Sponsored Gambling".