Gov. Mike Easley's proposed budget for FY 2002-03 includes $250 million in revenue from a state-run lottery that has yet to be enacted. Among many legitimate objections to the administration's idea are that expected net revenue is inflated by between 37 percent and 62 percent - creating a hole in the budget of as much as $96 million — and that the administrative costs of the lottery tax exceed both the cost of alternative taxes and any revenue "loss" to out-of-state lotteries.
North Carolina's approach to economic development policy has failed, with the state’s high tax burden, lack of industrial diversity, and hostility to entrepreneurial effort contributing to a painful decline in employment and competitiveness. Public policymakers should rethink their reliance on central-planning models and schemes to subsidize specific businesses or regions. Instead, the state should lower taxes and avoid costly regulatory mistakes like the "Clean Smokestacks" bill.
The ghastly terrorist attacks in New York City and Washington will have overwhelmingly negative consequences for the nation’s economy, despite the foolish suggestions of some that it will result in a net stimulus. North Carolina’s economy promises to be particularly hard-hit by troop deployments and faltering investor and consumer confidence. Now is the time for state leaders to dedicate themselves to strengthening the economy, not weakening it through massive tax hikes.
Policymakers should think carefully about the administrative costs of raising revenue through a state lottery. In effect, the state would be legalizing gambling, establishing a state monopoly on it, and then taxing gross sales at a 33 percent rate. The cost per dollar collected of this lottery tax would be 20 to 50 times greater than the cost of raising rates for other state taxes that already exist. The best course for the state is not to raise taxes at all but to reduce the size of government.
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