Shared from the 2018-04-11 Lawton Constitution eEdition

Expansion of gambling wrong solution

Governments, at all levels, derive revenue through taxation. Usually that revenue is obtained by taxing three economic bases: income, consumption, and wealth. Income and wealth tax is progressive. Consumption tax is accessed on everyone equally, normally at the point of purchase. Government then takes that revenue and funds services for the citizens- infrastructure, education, law enforcement, and so on.

Because only people pay taxes, government uses both direct and indirect methods to tax their citizenry. If a business incurs an increase in their costs of doing business, they can’t absorb the new cost and remain viable, so they pass those increases onto their customers in the form of a price increase. For example, when the price of peanuts goes up, the price of a jar peanut butter goes up. When the price of diesel goes up, the price of a jar peanut butter goes up. When the price of oil goes up, the PET jar the peanut butter is in goes up and so does the price to the consumer. When the government taxes corporate profit, the price of a jar of peanut butter goes up. Get the picture? Every cost component is passed onto the customer- to people. No business pays taxes. They can’t and remain in business. It is a fundamental economic principle. Every tax ultimately winds up being paid by the consumer.

Taxation can reach a point of diminishing returns. In other words, it can become excessive. If a tax places too much burden on the citizens, instead of producing more revenue to government, it will do exactly the opposite. Government always bases their estimates of what a tax will produce in revenue on how businesses and citizens have behaved before the tax was imposed. Very often, that doesn’t happen. They adjust and avoid the tax, revenue doesn’t materialize and in the process the overall economy suffers.

Last week, the Republican controlled Oklahoma state legislature voted to increase your taxes again. Both chambers voted to collect sales tax from online retailers like Amazon. Twenty million of the revenue is earmarked for education. They also voted to expand casino gambling in the state, by passing the so-called ‘ball and dice,’ bill, which will allow Las Vegas style gaming and betting in the state. The legislature has failed to understand the simple principle that gambling produces nothing. The expansion of gambling will ultimately cost state government in increased social programs, law enforcement, and corrections cost.

A 2013 study by the Institute for American Values found that as casinos have become so prevalent, so has problem gambling. The study also found that proponents of casino gambling often say that casinos provide entertainment for many Americans who enjoy occasional gambling, but a large proportion of casino revenue comes from problem and pathological gamblers. Evidence points to the conclusion that casinos disproportionately rely on problem and pathological gamblers for their revenue base. The problem gamblers very often cost taxpayers. Expansion of gambling in Oklahoma is a shortsighted solution to a long term problem.

Steve Fair is Chairman of the 4th district of the Oklahoma Republican Party. He can be reached by phone at 580.252.6284 or by email at okgop@aol.com . His blog is stevefair. blogspot .com.

“Taxation can reach a point of diminishing returns. In other words, it can become excessive.”

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