Sin taxes on gambling, tobacco, alcohol, and “adult” entertainment are big and better bigger.
The Washington Times (10/31/11 p.18) reports that the direct state and federal government take on gambling, tobacco, and alcohol is $24.9 billion, $44.3 billion, and $27.0 billion respectively. Delaware gets 8 % of its revenues from gambling alone.
Politicians like these taxes because they think they can raise them. But consider the consequences. As the Washington Times remarks, “it’s the governments that impose them that become addicted and the taxes are in effect ‘imposed on lower-income consumers.'”
The idea that government can both regulate these industries and enrich themselves from them with higher and higher taxes and fees is a non-starter. It is more likely that, over time, the industries will start running government than the reverse.
If these are “sin” taxes, the real sin lies in their potential to corrupt our government.