A Longitudinal Analysis of Income-Based Tax Regressivity of State-Sponsored Lotteries

Government-sponsored lotteries have been criticized for disproportionately generating revenues from lower-income consumers. Prior academic research on this aspect of government-sponsored lotteries reveals a set of conflicting findings: Many studies conclude that lotteries represent a form of regressive revenue production, whereas others conclude that lotteries represent proportional or even progressive revenue generation. Examination of the overall body of prior research suggests that lottery regressivity levels are not constant over time. With this research, the authors provide a more focused exploration of this issue by analyzing longitudinal sales data from six lottery states to determine patterns of change in lottery tax regressivity. The analyses provide preliminary evidence that lotteries become less regressive as they progress through their individual life cycles and as new marketing efforts—such as anonymous methods of play—become more prevalent. The authors explore implications for further lottery-related policy research, with particular emphasis on likely contributions from a relatively unexplored marketing perspective.

Equity Effects and Revenue Potential of Sales Taxation of Services: Some Empirical Findings

This study investigates the effects on sales tax regressivity and revenue productivity when various combinations of consumer services are added to the base. Idaho's commodities-oriented tax structure (which is similar to that of most other states) is the basis of this investigation. Unlike the conventional methods, progressivity-regressivity indices are developed to evaluate the equity effects, and this approach is argued to be superior. Two ability-to-pay measures are adopted for this purpose. Further, the study evaluates the revenue significance of including services in the base. From the standpoints of equity and revenue, the results strongly favor inclusion of service in the sales tax base.