Question

4. As we discussed in class, revenue from gambling is, in some states, generating more revenue than the corporate income tax. There a several reasons/issues that exist in the current corporate tax model being utilized by the states. However, we also know that state and local governments are increasing relying on gambling to generate revenue to support their financial plans. Please explain some of the reasons for the reduction in corporate tax revenues, and the policy makers should be aware of as they consider this revenue source?

Answer 1

Ans) In the previous couple of years a downfall trend in the corporate tax has been seen especially after the introduction of the Tax Cuts and Jobs Acts. The corporate tax which was highly considered to be of the utmost importance due to its three cornerstones; cost recovery, high statutory rate and worldwide application is now facing changes in its level of revenue per year.

The reduction in it may show a negative sharing outcome among the states that should be receiving it. Also another side to this is the harsh nature it Carrie's, and the kind of burden that the workers have to bear as a part of their income is contributed towards this tax. Thus this may reduce the burden and create new investment opportunities alongside capital accumulation.

But as an alternative to this the government is highly concentrating on the tax revenues generated through gambling, lotteries. Both the state and fed have a share in these taxes, and thus state organized lotteries are also available in the market. Right from the old days from the late 1800's its prominence has been seen, and today where it stands with around $10 billion revenue, accounting for almost 6-8% of the the total tax revenue trying to fill up the necessary gap for the government, as and when required. Although the taxes are levied to cut short the interest or to discourage the people from being addicted or participate in it, these have still been existing, and mostly the effects are seen on the pockets of a worker with lower levels of income.

Thus, several states including Nevada and Atlantic city, New Jersey, Las Vegas took control over the major portion of the revenue, later on several other states stood up for their portion and a considerable level of engagement of people is seen in many states.