Comment by aresant | Hacker News Reader

Comment by aresant | Hacker News Reader

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The lottery let's people gamble (which is illegal in most US states) because of "the children".

EG lottery profits go to support additional money for public schools.

This is all after a 16% operating / administrative cost, of course, which amounted to ~$4.83b in California alone in 2012 (2).

Back in 1988 an article appeared in the NYTimes suggesting that what was actually happening with the money, only 3 years in, was that state budgetary offices were simply using this newfound windfall to supplant existing commitments.

Explained by the State Superintend at the time "the percentage of the state budget spent on public schools declined from 39 percent four years ago to 37.5 percent last year. Lottery dollars, he said, have in effect been used to make up the difference."

Part of my frustration with California's recent retroactive tax-raises, ostensibly for education, is borne out of examples like these.

(1) http://www.nytimes.com/1988/10/04/us/california-educators-as...

(2) http://www.calwatchdog.com/2012/09/27/ca-lottery-states-cash...

    This is all after a 16% operating / administrative cost,
    of course, which amounted to ~$4.83b in California alone
    in 2012.

You're reading that completely wrong.

You can see their audited financial statements online.[1]

In 2012, the total lottery expense was $4.4B, into the following categories:

3.6% to operating / administrative, 1.7% to game costs, 6.8% to retailer costs, 58.6% to prizes, and 29.7% went to education.

That 3.6% represents $143mm in total cost (not $4.8B). Of that, $63mm went to salaries, $47mm went to advertising, $6.4mm went to PR and POS, $13mm to 'other professional services', $8mm to depreciation, and $5mm to G&A.

[1] Warning! - 10mb PDF - http://static.www.calottery.com/~/media/Publications/Financi...

I fully understand that, and support the tax raises anyways because if that is the only way to get them, then we can get them that way.

The problem is that the state constitution and politics makes it easy to get rid of revenue, but really hard to get it back. For instance consider Arnold Schwarzenegger, one of whose original goals was to drop the vehicle licensing fee from 2% of a car's worth to 0.65%. He got in office when times were good, he reduced that tax. Then times turned bad, and it was impossible to reverse that even though the state really couldn't afford it any more. This is about a $6 billion/year hole in our budget. That's on par with the recent tax increases.

Except that the vehicle licensing fee was part of our budget for decades. It was stable and reliable. Our recent tax increases are temporary. What do we do in the long run?

> The problem is that the state constitution and politics makes it easy to get rid of revenue, but really hard to get it back.

As it is quite easy to start spending but not stop.

> What do we do in the long run?

Cut spending. Deal with the actual issue: pensions. The vehicle licensing fee 'problem' is just a red herring.

If pensions are the issue, then the solution is probably a little more detailed than "cut spending". You show me someone with a 2 word fiscal solution and ill Sheila you a fool.

The bigger issue is that California's tax revenue is hugely cyclic, since it depends on income taxes on people whose incomes depend on the performance of investments. Thus during a boom, California gets lots of money, during a crash, the government is strapped.

But yeah, pensions need to be reformed. However even if you did so, the state would still regularly run out of money.

You could find a way to give just about any government billions more in "revenue" (my, what a polite euphemism for theft) and they'll still find ways to spend more money than they take in.

The problem isn't finding enough "revenue", it's simply spending within their means.

> vehicle licensing fee from 2% of a car's worth to 0.65%

In Denmark the fee is 180% of the car's worth... (sorry for OT)

I don't think you know what a licensing fee is.

That's the fee that you need to pay each year to update the license on the car. I'm quite sure that in Denmark you don't pay 180% of the car's worth every year.

Yeah, searching a bit suggests that the huge tax is on the purchase, not an annual thing.

The fee for me to license a car I bring to denmark is 1/3rd the figure you cited.[1] Do you know why there is such a disparity? Would you mind explaining the rationale for such a high fee?

(I realize its not your personal policy, I am just curious about what the government says about the fee. As an American it sounds strange but I imagine such a low % here in the states is equally as strange to you. Thanks for indulging my curiosity.)

[1] https://www.workindenmark.dk/en/Find_information/Information...

The 180% is for private cars. They give breaks for vehicles with special registration (commercial, foreigners etc.), I guess to not stifle business / foreign workers too much.

I think the rationale for the high fee is (a) Denmark likes taxes (around 50% income tax on average) to run our comprehensive welfare state, and progressive taxation that taxes wealthier people more is seen as the best approach (new car buyers sort of fit into this), and (b) "the environment", we have very good public transportation (and, famously, bicycle facilities) which the government wants to encourage.

I don't agree 100% on those points but there it is.

How does anyone afford 180% the value per year? It seems like it would make buying any car more than a few thousand DKK only possible for a very small rich few.

How can poor people afford to buy a car? Public transportation isn't available in all places and at all times of day.

It depends on where you are. Public transit in London, for example, is amazing. The longest wait for a train at my local station (Zone 2) was around 12 minutes off peak. Night buses take over for the tube late at night. They'll take you where you need to go, albeit a little slowly. A yearly pass costs £1216 (Zone 1-2). Good luck getting insurance and petrol for much less than that.

There's an argument to be made that public transportation isn't available because poor and middle class people can afford cars.

Note that we hardly have poor people (by American standards) because of the welfare state, which is partly funded by these extremely high taxes, but it is difficult for low income people to afford a car (gasoline is heavily taxed too). If they really need it they will buy an old beater and drive it a couple of years until it dies, then repeat (which somewhat nullifies the rationale of car registration fees helping the environment).

"old beaters" also differ from American standards. I doubt the typical American "beater" car would be considered roadworthy in Denmark.

This happens in Ohio too. From the Columbus Dispatch:

"School leaders have complained for years that the state engages in a shell game; for every extra dollar generated by the lottery that goes to schools, a dollar is taken out of the state’s general-fund allocation to districts across the state.

The shell game — difficult to prove in a multibillion-dollar state budget — was briefly exposed in late 2001 when Ohio added Powerball to the lottery. The state estimated $40 million would go to schools from the new game, so lawmakers promptly reduced general-fund money for schools by $40 million."

http://www.dispatch.com/content/stories/local/2012/07/19/edu...

The reason states started running lotteries was actually to deny business to the mob. Mafia used to run the numbers games right alongside the protection racket. Revenue was mostly a side effect of a law and order decision.

I can't say I understand how anyone would be more or less upset about taxes due to the fact that lottery money goes to schools.

Can you provide a source on the mafia connection?

Oral history was my source but its the standard oral history -- I'd be surprised to learn it was wrong.

http://en.wikipedia.org/wiki/Numbers_game

I hate this phenomenon. It's so easy for an organization to misappropriate targeted funds, simply by removing & redirecting regular funding equal to the amount of the targeted funds.

It's why I am very hesitant to donate to my alma mater. I want to, but I know no matter what I tell them I want done with my donation, a little wizardry on the books and they can send it wherever they please.

I donate directly to a student group I founded for the same reason. Doing it through the University results in the University taking a cut.

I just write a check directly to the organization... Or send pizza!

Something to think about: In some countries where general prostitution is illegal but government sanctioned version is, the government collects tax from johns.

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