The National Lottery - a tax on the poor?

Question

Most lottery money is used to fund community projects and other things that ought to be government-funded. If you play just twice a week, that's £104 a year, and if you're lucky you might win £20 a year, making an annual loss of £84. If you do this for ten years, that's a loss of £840, which instead could be saved to fund a child's education. I told my brother this as he was buying a lottery ticket yesterday, and he responded "You've got to be in it to win it" - the sort of cliché that keeps people wasting their money on something from which they will most likely never win a great deal of money.

Sexy Me:
It's roughly $200-$208.

Answer 1

Yes, it is a proxy tax on the poor.

So are all these:
State sponsored illegal drugs
Higher prices in poor neighborhoods
Fees and fines for code violations in poor neighborhoods.
Disadvantage in court cases resulting in higher fines than those of wealthy people with connected lawyers.
Unnecessary products marketed to the poor.
Unnecessarily high public transportation cost.
Fees and fines by public utilities for those who can't afford service and miss payments.
Mandatory work permits for certain unions and jobs.

Lotteries are pernicious because they seem to offer a chance at fortune.
They prey upon the innumeracy, (mathematical illiteracy) of the uneducated, (the poor)
They promise financing for things that should already be paid for through taxes.
They "steal slowly" through the illusion of small expense with big potential reward.

Psychologically, the allure of easy money is a drain on valuable time, energy and brain power that could be more productively utilized.

Lotteries are tremendously "front-loaded" they only pay half of the advertised jackpot ( if taken in lump-sum advance) and then the proceeds are taxed again as income, even though every penny was bought with post tax dollars. This is not only a tax, it is a tax upon a tax upon a tax, after the taxes were already paid!

Most educated observers agree; the lottery is a type of tax that mostly affects the poor. However, it is the least of our insults to them. There are more important issues affecting the poor. We should address them all, but the lottery is voluntary, so it seems less evil. And as your brother pointed out, "you've got to be in it..."

Answer 2

I don't think that the National Lottery is a tax on the poor as it is often indicated. I certainly see your point that the money goes to things that would otherwise be paid for with taxes but since it's completely optional it can't really be called a tax. It can possibly be a charge on those who are bad at math but the real answer is something else. I believe the real answer is that the lottery provides incentive that cannot be provided elsewhere.

The incentive behind the lottery is simply "there is a chance". Yes most of us understand that this chance is extremely small but still the chance to possibly have millions is better than the reality of never having millions. The fee for entry into the potential world of complete financial freedom is roughly 2 GBP a week or 4 USD. The chance of that money ever leading to anything significant for that person is just as slim as the lottery.

This is not significantly different than the motivation to commit criminal acts like dealing drugs or robbing a bank. You might make a huge amount of money from one of those endevors even through the chance of getting killed or jailed is higher than the chance of getting rich there is still a chance. However working at the fast food restaraunt will never get you rich so there is no chance. When presented with possibilities people make poor statistical decisions and choose the smallest chance of huge payoffs over the greatest chance of mediocre results.

A difficult area to say the least but the removal of the lottery would just encourage spending that money on other less controlled or beneficial (at least on the community level) activities.

Answer 3

NO! Playing the lottery is a personal choice that every person who plays makes, whether they are rich or poor. It is not mandated that anyone play.
How do you determine what programs "ought to be government funded?" The only difference between lottery funded programs and government funded programs is that the money used for lottery programs is spent voluntarily by the poplulation who play. Government programs are paid from from money extorted from the population by the government. I prefer the system as it is that allows personal choice and at least offers a small chance that you can recoup some of your money. When the government takes your money, you will never see it again and have very little say as to how it is spent.

Answer 4

The lottery grants try to make a difference with grants for good causes. Other countries having a similar lottery system simply added it up to government budgets. If you play and do not win think two things: 1.- you are paying silly tax and 2.- you are making some difference to some community groups. Then, decide which is mmore important for you.

Answer 5

I totally agree. I think it's a mindset of always trying to get something for nothing.

I don't want to even think of the butt loads of money my dad has spent trying to win the lottery. I guess it's an itch. The government keeps you thinking you're going to hit it bigt.

People never think about the high taxes they have to pay after winning the money. They never think what will happen/how much money they'd have to share if several people won.

And I just don't understand how anyone could pay $20 for a scratch off ticket and you're subject to win nothing at all or maybe just a $1. Just plain ignorance in my opinion.

BTW...what does 104 pounds equate to in dollars?

Answer 6

It's a tax on not being very good at math.

What gets me is people who play the lottery but won't invest in the stock market because they might lose their money.

I know people who buy $20 per week on the lottery. At 5% earnings that's almost $133,000 they will not have waiting for them after 40 years. And for that they get an almost infinitessimal chance at winning. No surprise then that most lottery winners report they are both broke and unhappy within a year or two after winning.

Answer 7

Completely agree with you - the Lottery, and those blasted scratchcards....the amount of times I've been in the queue in my local paper shop and someone in front of me buys £10 worth of scratchcards at once.....and cant even wait to leave the shop to start frantically scratching to see if they've won anything.....

It wouldn't be so bad, but it seems to me, time after time, that Lottery Funding goes to completely the wrong projects.....

No, I don't do the Lottery....the only time I've ever bought a ticket was on the very first draw...

Answer 8

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state and is compulsory and enforced by the police and justice system.
The National Lottery isn't compulsory, it's entirely voluntary.

Not so much a tax on the poor, rather a tax on the gullible!

Answer 9

I think it's more fair to say it's a tax on the stupid, because unlike most taxes-- it's 100% voluntary. I see morons standing in line and wasting 100's on lottery tickets all the time. If they'd just been investing that money legitimatly all this time they really would have something now.

Answer 10

A responsible person would prioritize his or her spending.

You stated your brother was "...buying a lottery ticket..."

If he enjoys using an occasional two dollars for a ticket and has a little fun, why be a downer and why do you care?

If a person drains his or her bank account for the lottery, then it's probably a problem and that person probably has a gambling addiction.