A Tax by Any Other Name

By Dr. Joseph Horton

Posted ~ March 17, 2004

        Most people who gamble do it for fun. They do not play to pay other people’s taxes. After more than a year of debate, the Pennsylvania governor’s proposal for slot machines has not gone away. The idea has appeal. The slot machines would simply be an optional tax that I would choose not to pay. Part of me relishes the idea of others choosing to pay my taxes, allowing me to keep more of my own money. But I have doubts about the claims made by slots proponents.

        The slots proposal calls for the state to sell a limited number of licenses for slots parlors at horse racing tracks , as well as for one site each in Philadelphia and Pittsburgh. What has never been answered to my satisfaction is why limit slot parlors to these locations? If we are interested in generating revenue for tax relief, why not sell the licenses to the highest bidders without regard to location?

        Why are Philadelphia and Pittsburgh the only exceptions to the rule that slots must be at horse racing tracks? Why not State College? Why not a casino near the Grove City Outlets? What Philadelphia and Pittsburgh have in common is Democratic local governments that are having trouble living within their means.

        It seems to me that the current proposal has not been devised to maximize revenue for tax relief. It has been written to reward specific people. People who own horse racing tracks, horse breeders and overspending Democratic politicians will reap the rewards of slot machines. But what about home owners whose property taxes allegedly will go down?

        Only smoke and mirrors appear to keep school property taxes from continuing to rise. Part of the proposal would require school districts to get the approval of voters before raising property taxes more than a certain amount. Notice that school boards can continue to raise property taxes, they are just limited in how fast they can raise property taxes. But even this limitation is a ruse. School boards would be able to bypass the voters by going to a judge to ask permission to raise taxes. I bet that even with revenue from slots, property taxes continue to go up.

        I believe that adults who choose to spend their money gambling should be free to do so. President Clinton used to ask Congress to send him a clean bill, one without amendments that focused on one issue. I say if we are going to expand gambling, then let’s have a clean bill. Just legalize gambling and tax casinos like any other business.

        The slots proposal is merely a new tax, an optional tax, but a tax. Even if the proposal works as claimed, Pennsylvanians collectively will have to spend far more on slot machines than we would save in property taxes to yield the tax reductions. Every dollar of tax reductions will have to be paid for with several dollars spent at the casinos because the track owners, horse breeders and politicians will keep part of what is spent. The government will spend more and we will keep less. At its best the slots proposal is an optional tax increase that will reward a few special interests. At its worst it will increase government spending and yield no reductions in property taxes. I would love to see a tax cut based on reduced government spending. However, I will not be placing any bets on government spending less and letting us keep more.

Dr. Joseph Horton is a psychology professor at Grove City College.  For our most recent policy briefs please visit www.shenangoinstitute.org