Sunday, May 29, 2011

10 States That Profit Most From Sin


Sin! Just the mere mention of the word conjures up all types of images ranging from a deliciously sinful calorie-laden dessert all the way to the far reaches of the spectrum with the truly unthinkable and/or unacceptable.

But states profiting from sin? What's that all about?

I came across an article about state income derived from taxes on goods and services that are deemed to be sinful—sin taxes. The article's definition of sinful is all things related to tobacco, alcohol, and gambling.

In these tough economic times, states are scrambling to replace lost income and bolster their budgets any way they can. Many states have increased the percentage rate of their sin taxes in an attempt to have enough revenue to cover their expenses without making any more cuts to the state budget than are absolutely necessary. The article's ranking of states is based on the percentage of the state's total revenue that comes from sin taxes rather than the percent of the actual tax being levied or the dollar value of the income from those taxes. For example, Pennsylvania charges a 55 percent tax on slot machine profits while Las Vegas collects only 8 percent of the profits. But that 8 percent translates to a larger dollar amount than Pennsylvania's 55 percent tax on slot machines.

A few states generate less than 1 percent of their total revenue by taking advantage of people's desire for vice while other states derive between 5 percent and 13 percent of their state income from sin taxes. Something I found interesting about this list is the differentiation between lottery income and gambling income from other sources.

These are the states with the highest percentage of revenue from our proclivity for sin.

10) New Jersey: portion of total revenue from sin is 4.34 percent, most profitable sin is the lottery

9) New Hampshire: portion of total revenue from sin is 4.54 percent, most profitable sin is tobacco

8) Illinois: portion of total revenue from sin is 4.55 percent, most profitable sin is tobacco

7) Michigan: portion of total revenue from sin is 4.91 percent, most profitable sin is tobacco

6) Pennsylvania: portion of total revenue from sin is 5.04 percent, most profitable sin is gambling

5) South Dakota: portion of total revenue from sin is 5.63 percent, most profitable sin is the lottery

4) Indiana: portion of total revenue from sin is 6.11 percent, most profitable sin is gambling

3) Delaware: portion of total revenue from sin is 7.55 percent, most profitable sin is the lottery

2) Rhode Island: portion of total revenue from sin is 8.66 percent, most profitable sin is the lottery

Finally (and probably no surprise to anyone)
1) Nevada: portion of total revenue from sin is 12.83 percent, most profitable sin is gambling

Note: the article didn't say whether taxes on income from legalized prostitution in specific counties of Nevada was included.

6 comments:

Anonymous said...

Then there's Texas, where politicians talked us into the lottery so the revenue would go to the schools. Once the lottery was in place, of course, they said, "Oh, but we need that money in the general fund." Now our schools are in crisis financially and have slipped to 50th scholastically. No surprise, right?

Samantha Gentry said...

I think all (or most) state lotteries were presented to the voters as money for education, then "something" happens. Quite often the lottery money does go to education, but the portion of the state budget allocated for education from tax revenue is mysteriously cut or greatly reduced from the budget leaving education only the lottery money rather than the lottery money in addition to its original portion of the state budget.

Lynne Marshall said...

Very interesting, Samantha. In these tough economic times, it seems people still find the money to gamble and buy lottery tickets, though I would be curious to see those same stats a year or two from now.

Samantha Gentry said...

Lynne: Yes, I thought so, too. In these difficult times there are those who still have disposable income to spend on the "sins," money that they don't need to save or invest for the future.

morgan wyatt said...

As a person who live less than a mile from the Racino (combination of horse racing track and casino), I can verify that it always stays busy. Gambling is less of a sin here and more of a past time like bowling.:)
It isn't glamourous models in evening gowns escorted by tuxedoed dates who gamble, but grannies with walkers and grizzled truck drivers. Not surprising, neither appear in the commercials for the casino.


I will admit the casino hosts many free events like concerts and fireworks displays to get people to visit, which usually motivates me to do so.

Samantha Gentry said...

Morgan: I find it interesting that those taxes are referred to as 'sin taxes' rather than just taxes. Certainly puts a specific slant on it. As you said, most casinos are not populated by the elegant beautiful people at the $100 tables and machines that you see in commercials, movies, and television shows.

Thanks for commenting.