Politicians suggest lottery tax

James Clay has a money idea.

The 179th Dis­trict Demo­crat and col­league state Rep. Ros­ita Young­blood want a 5-per­cent tax on Pennsylvania Lot­tery and oth­er gambling win­nings, and they want the rev­en­ues to be used for edu­ca­tion.

This idea could mean a lot of money if the three bills the le­gis­lat­ors will soon in­tro­duce pass the state House and Sen­ate. The lot­tery paid out just un­der $2.3 bil­lion dur­ing the 2012-2013 fisc­al year, which ended June 30, spokes­man Gary Miller said Monday. 

Mul­tiply $2,300,000,000 by 0.05, and the res­ult is $115,000,000. That’s nowhere close to solv­ing the edu­ca­tion short­fall, but “115 mil­lion is noth­ing to sneeze at,” said City Con­trol­ler Alan Butkovitz, who said he ad­vised the le­gis­lat­ors on fram­ing their bills.

Be­sides, that sum is only part of the money that could be raised. In a memo seek­ing the co-spon­sor­ship of fel­low le­gis­lat­ors, Young­blood (D-198th dist.) said she ex­pects the meas­ures “could raise as much as $500 mil­lion for edu­ca­tion­al pro­grams that are crit­ic­al to im­prov­ing stu­dent achieve­ment and build­ing a stronger edu­ca­tion sys­tem in Pennsylvania.”

Cur­rently, casino and racetrack win­nings are sub­ject only to state in­come tax. 

“My pro­pos­al would re­quire win­ners to pay an ad­di­tion­al 5 per­cent fee on all gambling win­nings,” Young­blood stated in a news re­lease on her web­site.

One of the pro­posed bills es­tab­lishes a Pub­lic Edu­ca­tion Im­prove­ment Fund, “which would re­ceive the rev­en­ue gen­er­ated by a new gambling win­nings as­sess­ment fee, and re­quires the money to be avail­able to all school dis­tricts and used for edu­ca­tion­al pro­grams,” wrote Young­blood, who is Demo­crat­ic chair­wo­man of the House Gam­ing Over­sight Com­mit­tee.

Pennsylvania is one of two states that don’t tax lot­tery win­nings and some oth­er gambling, Clay said. New Jer­sey, for ex­ample, he said, im­poses a 10-per­cent tax on its lot­tery win­ners. Cali­for­nia is the oth­er state that doesn’t tax lot­tery wins, Young­blood stated in her memo to le­gis­lat­ors.

In two of the bills, Clay is pro­pos­ing wip­ing out Pennsylvania’s 42-year-old tax ex­emp­tion for lot­tery win­nings. It’s Young­blood’s meas­ure that sets the tax rate on all gambling win­nings at 5 per­cent

If passed, the pro­pos­als “will def­in­itely bring money to strug­gling school dis­tricts across the state,” Clay said. They wouldn’t have an im­pact on or­din­ary people, he said. “It’s only tax­ing the win­ners.” 

Asked who might op­pose his bills, Clay said, he doesn’t be­lieve there is any or­gan­ized group of gambling win­ners who would try to de­feat it.

“It shouldn’t be hard to en­act,” Butkovitz said. Right now, Clay said, he and Young­blood are look­ing for sup­port­ers in the Le­gis­lature. ••

You can reach at jloftus@bsmphilly.com.

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