October 7, 2015

The Lottery is Not a Tax on the Poor

By In Blogs, C.Jay Engel

The common saying is that the lottery is a tax on the poor.  I think this is an unhealthy way of looking at the lottery.  I don’t believe people –especially the poor, who should be saving their money– should play the lottery and indeed should recognize it as a dangerous and addicting form of gambling.

But this does not mean it is a tax.

The sine qua non of a tax is that it is coercive and involuntary.  Whether you defend taxation or not, whether you like it or not, you must at least recognize that taxation is categorically a means of wealth transfer based on the use of aggression; as opposed to the market means based on mutually agreeable exchange.  All taxation is backed up by threats and violence.  This is why, if you don’t pay your taxes, you ultimately go to jail. At first of course you will get “reminders.” Then you will have fees and penalties. Then they will put a lien on your assets.  Then, if all these fail, they will come by and physically put you in a cage. Such is taxation.

What happens if you don’t pay the lottery?

You save money.  You can put this money away in a sock, or spend it on food, or pay a bill. Et cetera. Lotteries are voluntary. They require self-discipline in order to stay away from them. No one forces the poor to play the lottery. Yes the lotteries are well-marketed. They promise the world in exchange for a couple bucks. This surely is tempting for an individual who cannot keep up with his monthly payments.  The lotteries promise that everything will be better. They encourage one to “dream big.” But if someone falls for the marketing, ultimately, he must accept responsibility for his own actions. He must learn from his mistakes. Next time, he must say no.

But the lottery is not a tax on the poor.  Simply because it is not a tax.

Don’t play the lottery. But don’t mischaracterize it either.

Written by C.Jay Engel

Editor and creator of The Reformed Libertarian. Living in Northern California with his wife, he writes on everything from politics to theology and from culture to economic theory. You can send an email to reformedlibertarian@gmail.com
  • A couple of thoughts:

    First, the old saying I’ve heard is not that the lottery is a tax on poor, but rather that it’s a tax on people who can’t do math. Which, if not strictly true on the “tax” part is true in the general sense. The odds of winning more than you spend aren’t that great, and the odds of winning huge amounts of money are astronomical.

    Secondly you write that “The sine qua non of a tax is that it is coercive and involuntary,” and claim that the lottery is not a tax because no one is forced to play. There’s a slight defect in your logic.

    If I buy anything at the store, I pay sales tax. If I buy CERTAIN things at the store (gasoline, tobacco or alcohol are the main things that come to mind), I pay excise taxes. If I buy land, I pay real property tax. If I buy a car, I pay personal property tax.

    Now, all of these taxes are “voluntary” in the sense that I can avoid them by not buying or owning stuff. Just like I can avoid the income tax by not having a job.

    With respect to the lottery, no, nobody has to play — but IF they play, they have to pay money to the state, because the state has awarded itself a monopoly on running lotteries. How is the surplus payment to the state (above and beyond the costs of the prizes and administration of the lottery) not a tax in the same sense as any of the other ones mentioned above?