The Itchy Finger of Government Regulations

by Wyoming Liberty Group Staff

If a business is not taxed or regulated, does it exist?

This is not just a question for practitioners of empirical ontology, but one that has real-world meaning in Wyoming today. Explains the Casper Star Tribune:

Since the idea first appeared in the Legislature last year, regulated gambling was recognized by many to be a troublesome – if needed – topic for lawmakers to consider. Throughout the Cowboy State, a barren regulatory environment and poor enforcement has led to an explosion of unregulated gaming machines in bars and truck stops all across the state, generating millions of dollars in untaxed business with no oversight.

We all note the Tribune's first adjective when referring to gambling as a business: "untaxed". The second property assigned to gambling is, of course, that it has "no oversight".

This may be the Tribune's choice of words, but the idea that nothing can happen without government being a stifling part of it, is widely shared today. One reason is misguided benevolence: someone has to make sure that businesses do not intentionally harm and hurt their customers.

Of course, when proponents of this big-brotherly love are asked if they themselves would intentionally harm someone they were interacting with, the answer is always a resounding "no". For some reason, though, others cannot be trusted with having the same enlightened insight as to how to behave and be civil.

The heavy benevolent hand is not government's only regulatory application. Another, more sinister motive is the one that wants to impose an ideological paradigm on the world. In some cases, the regulators – and legislators delegating power to them – are driven by egalitarian ideas, such as wanting to make sure every customer gets a gold-plated deal (Obamacare). To others, it is a matter of making sure some contrived environmentalist motive is met (carbon emissions).

It is hard to see any ideological motive behind gambling regulations. More likely, this is another case of Big Brother's regulatory finger at work, itching with a desire to tell us Wyomingites what we can and cannot do. Yet this is not the only goal behind the drive to get government involved with gambling. The Tribune again:

In states like South Dakota — where the gaming industry is largely unfettered by regulation — slots, consoles and other machines of vice litter pump stations and taverns across the state … Then there's the money – specifically, the potential Wyoming will miss out on more than $4 million in untaxed revenue estimated to be generated by unregulated gaming machines this year.

In other words,

1. a) gambling is a vice and bad for people, and therefore government must regulate it; but
2. b) people must gamble so we can get more tax revenue.

The idea that people need to do things that are bad for them so that government can get more money, is driven by the pursuit of the "sin tax". A more appropriate term for it is "addiction tax": gambling, like alcohol, tobacco and narcotic drugs, are addictive to a larger or lesser degree. Once people get hooked on them, their addiction becomes a reliable source of revenue for government.

For clarity, the Casper Star Tribune does not make the case for taxing gambling based on its addictive nature. No advocate of gambling taxes will suggest anything to that effect. That said, the fact that gambling has an addictive component to it is of not consequence in gambling-tax advocacy; if it were, the big-brother desire to protect people from themselves would take over.

Nobody in his right mind would claim that we can live entirely without taxes, but the taxes we do need should be low, simple and transparent. They should be as non-invasive to the private sector as ever possible. Furthermore, they should be kept minimal by a strict limitation on the services that government provides. A state within minimal confinements can easily live on taxes that stay far away from the muddy waters of gambling and other addictive products.

Rather than having a conversation about taxing (and regulating) gambling, we should focus our attention on reforms that can make our state and local governments fiscally sustainable.