Question

In: Economics

1. States are increasingly relying on revenue from gambling to generate funds for their financal plans...

1. States are increasingly relying on revenue from gambling to generate funds for their financal plans on annual basis . Lotteries , for example , have been on the rise with states providing their own jackpots , and increasing the jack-pots by utilizing multi-state games . Please provide some of the policy rationale for using this revenue source , along with some of the issues that policy makers should focus on in the future

2.Please discuss the three reasons State / Local governments borrow . What are the two primary types of debt issued ( defining them ) , describing some of the differences between the two.

Solutions

Expert Solution

Answer:

1.some of the policy rationale for using this revenue source , along with some of the issues that policy makers should focus on in the future are:

The first rationale for the policy is that demand for the gambling is inelastic in nature.

So, an increase in the tax on gambling activities, as well as increase in the number of gambling schemes, will generate more revenue.

The second rationale is that It takes a very nominal or small amount from the individuals using lotteries.

So, the losses on a per person basis is distributed upon the mass.

So, this loss does not create harm in general to the individuals.

Though, the government gets funds from gambling to implement its financial plans.

But, it has issues also.

The first issue is the nature of gambling that brings addiction among the people.

As a result, it is harmful to the society at large in the long run.

Further, issue is the government should focus upon fund collection by applying a tax on production activities.

Here, the tax deposits, by the businesses are the mirror image of the growth and development taking place in the economy.

So, government should plan to increase the industrial as well as agricultural activities that can increase the GDP.

It will also increase the revenue collection by the government using tax rates.

The third issue related to gambling is the promotion of the pervasive incentives that comes to the only few people, but takes funds from many people.

So, such policy is detrimental to the society in the long run.

2. three reasons State / Local governments borrow:

three primary ways in which capital is transferred between savers and borrowers

  • Direct Transfer of securities or money for e.g. the stocks and bonds are directly sold to the investors
  • Investment banking house serves as an intermediary ,the business first sells the stock or Bonds to the Bank which then sells these stock s and bonds to the investors.
  • Financial intermediary for e.g. mutual funds which buys stocks or bonds but issues its own stock to the investors.

the two primary types of debt issued ( defining them ) , describing some of the differences between the two:

It is true that it is very important to understand the state and local taxes to operate a business.

The primary types of state and local taxes are:-

1) Personal Tax

It is the tax which is to be paid on the annual income earn by the person. Now a days, most of the states requires residents to pay a personal income tax.

2) State Sales Tax

It is the amount of tax which is paid to the government if a good is being sold. This tax is also known as the value added tax.

3) Property Taxes

The amount of property tax depends upon the total value of the property or on a certain percentage of the value.


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