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. ••