The Ten States That Profit Most From Sin
First Posted: 05/14/11 12:51 PM ET Updated: 05/14/11 12:51 PM ET
As state budgets strain under huge debt loads, they are counting increasingly on "sin taxes", one of the few reliable sources of revenue in these uncertain economic times.
States have profited from the public's voracious appetite for easy money (gambling), nicotine (smoking) and booze (alcohol) for years. Some are more successful at it than others. A few states generate less than 1% of their revenue from preying on their residents' vices while sin accounts for between 5% and nearly 13% of the budgets of others. Some of the difference can be chalked up to varying rates of addiction, but aggressive tax policy also plays a part. Pennsylvania makes the greatest percent of its revenue from gaming taxes of any state. It charges a 55% tax on slot machine proceeds. Conversely, Las Vegas collects only 8%.
Sin is profitable for many reasons. For one thing, it sells well. In New Hampshire, more than half of its state revenue comes from tobacco sales. Meanwhile, states like Michigan generate revenue evenly across all sins. Still others, such as New Jersey, make a great deal from these bad habits because they're taxed at such a high rate.
To identify the states that make the most money from sin, 24/7 Wall St., calculated the taxes and revenue each state makes from gambling, alcohol, tobacco and lotteries and compared the receipts against the total revenue for the state. The Tax Policy Center provided alcohol and tobacco tax receipts for 2008, the year for which data is most recent. The North American Association of State and Provincial Lotteries provided state lottery receipts. Revenue from taxes on gambling, as distinguished from lotteries, was obtained from The American Gaming Association.
Sin taxes should be viewed in context of the broader economy. Many investors are concerned that the anemic economic recovery will sputter further, particularly as the debate over the debt ceiling continues to rage.
Members of the GOP, led by Speaker of the House John Boehner (R-OH), have indicated they will not vote to raise the debt ceiling without significant spending and budget cuts including popular entitlement programs such as Medicare and Medicaid
(source:.huffingtonpost.com)
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