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The Incidence of State Lottery Taxes

Author

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  • Jerome F. Heavey

    (Lafayette College)

Abstract

The price of a lottery ticket consists of two components, the production cost of the ticket and an excise tax. This tax is an approximately constant proportion of ticket price and is fully shifted to the consumer. Hence the ratio of tax to income is a multiple of the expenditures-income ratio. Data from the Pennsylvania state lottery were used to estimate the relationships between lottery expenditures and income, age, race, education, and city residence. It is concluded that the excise tax on lotteries is moderately regressive, representing much less than one percent of income at all income levels.

Suggested Citation

  • Jerome F. Heavey, 1978. "The Incidence of State Lottery Taxes," Public Finance Review, , vol. 6(4), pages 415-426, October.
    • Handle: RePEc:sae:pubfin:v:6:y:1978:i:4:p:415-426
    DOI: 10.1177/109114217800600402
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    References listed on IDEAS

    as
    1. Young Chin Kim, 1973. "Choice in the Lottery-Insurance Situation Augmented-Income Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(1), pages 148-156.
    2. Lawrence J. Kaplan & James M. Maher, 1970. "The Economics of the Numbers Game," American Journal of Economics and Sociology, Wiley Blackwell, vol. 29(4), pages 391-408, October.
    3. Handa, J C, 1971. "A Theory of Risk Preference in Gambling," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1073-1083, Sept.-Oct.
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    Cited by:

    1. Stranahan, Harriet & Borg, Mary O., 1998. "Horizontal Equity Implications of the Lottery Tax," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 71-82, March.
    2. Stranahan, Harriet & Borg, Mary O., 1998. "Horizontal Equity Implications of the Lottery Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(1), pages 71-82, March.

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