A Lesson in How to Increase Tax Revenues

Who would have believed in 1993 when riverboat gambling was legalized in Indiana that ten years later these activities would be the state's leading business tax revenue source? By 2005, these floating casinos could be paying more in taxes than all of Indiana's major corporations -- including such giants as Eli Lilly and Anthem -- combined. In a recent report that estimated tax collections for the coming two years, state officials predicted that taxes on riverboat wagering would reach $607 million, $26 million more than would be generated in corporate taxes, by the 2005 budget year. This a significant boost to the state's treasury, at a time when most states are struggling to make ends meet.

Despite this considerable growth in gambling taxes, these revenues still are dwarfed by money poured into state treasury from sales, individual income and gasoline taxes. In fiscal year 2002, those taxes totaled more than $8 billion. Casino operators caution state government not to go too far in raising taxes on gambling, which could have the effect of killing the goose that is laying the golden egg.

Some states were early to jump on the gambling boat, while others have either avoided it altogether or have moved slowly in that direction. Regardless of your philosophy of gambling, it is a significant tax revenue generator. The same holds true for Indian gaming, which has increased economic development on reservations across the country.

Go here to read more about the Indiana situation.