Vice taxes, and who they impact

Saw a piece on the news feed this morning about the party of “law and order” and “traditional values” in Wisconsin is pushing legalization of Pot. Recreational use has been legal in Michigan for a few years now.

Michigan has had a state lottery since the early 70s, casino gambling since the 90s, and, now, on-line gambling.

It is probably safe to assume that this push to legalize vices is motivated by the tax revenue the state receives.

How is that tax revenue distributed among different demographics? I don’t have any data. I am wondering if there is data. Do people in, say, the lower 50% of the income distribution spend a greater percentage of their income on vices, that the upper tiers?



Here is some nationwide revenue demographic grist for your lottery ticket mill:

Who Plays the Lottery? A 2023 Insight Into Lottery Demographics (

How much various demographics receive will vary by state, since many have different spending philosophies, dominated by “education”…which means one would then have to track who benefits from these expenditures (directly and indirectly).

Good luck!


I can’t answer your question but I would advise the Wisconsin tax authorities to dig deep into what happened in WA State which has a 40% tax on pot.

According to news reporting, this has driven many small local pot growers out of business since they can’t make a profit. The big growers in Oregon and California have incredible surpluses which they can’t legally ship to other states. The price of pot has plummeted since supply greatly exceeds demand. One Oregon grower still has 75% of last year’s production in inventory. I assume that “some” of the excess pot will enter the illegal market.

The organizations which push legalization pay no attention to the very real physical and mental harms that pot can cause to a segment of the population, including addiction and potentially triggering psychosis. (Similar to alcohol, adolescents are more vulnerable. The harms only impact a fraction of all users but there aren’t any warnings of potential harm.)

Prohibition of cannabis is similar to Prohibition of alcohol. Both products potentially cause serious harm to a fraction of the population.

I don’t use cannabis myself so I don’t have a dog in this fight. Legalization and taxation do have a history at this point which state actors should study.


People do see winning the lottery as the only way out of poverty. People do like to gamble.

Numbers games have been around forever – long before governments moved in – to use proceeds for the public good.

To me its a voluntary tax. Relatively harmless when used in moderation-- like many vices.

Murph, thanks! That is just the sort of data I was looking for. Does tend to support my suspicion too: the “lottery tax” is nearly flat, with people with a six figure income blowing $17, while the poor blow $16, ie a higher percentage of their income.

According to a Gallup poll, 40% of low-income US citizens bought a lottery ticket in the 12 months preceding said poll. However, lottery participation demographics show that 56% of middle-income Americans claimed they did the same, as did 53% of upper-income US citizens.

… However, while the low-income lottery players do buy substantially more tickets for lower prizes ($10 to $100 million), ticket sales per capita are almost the same for both groups when looking at the $125+ million prizes. On average, the top 10% spend $17 per capita on lottery tickets, while the bottom 10% spend $16.

Happy to be of service, Steve!


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That is what Michigan does, claim lottery proceeds fund “education”. The (L&Ses) in Lansing always play a shell game. When lottery proceeds go in to education funding, money from general revenue is withdrawn from the education budget. Lansing did the same thing with road maintenance funding: raised the fuel tax and registration fees, to generate an additional $300M/year, then withdrew $300M a year from the road budget that had been coming from general revenue.



Nothing new under the sun department. I remember reading an article, in the 60s, about how cigarette smuggling into New York was big business. People would load up trucks down south, where cigarette taxes are very low, and sell in NYC, where the taxes were high. I recall the article had a pic of a stake truck with a fake load of lumber on it: only the visible surfaces of the load were lumber. The inside of the load was hollow and packed to the brim with cartons of smokes.

One of the cases of policemen sitting on a man until he suffocated was in NYC. His crime? Selling individual smokes, rather than a sealed pack. The smokes he was selling were probably smuggled into the city.

From the Wiki article:

NYPD officers approached Garner on July 17 on suspicion of selling from packs without tax stamps.

Here is some data from the government on consumer spending.

Income quintile      Ave annual spending
 before taxes      Alcohol         Tobacco
   $12K           $0.2K  1.7%    $0.3K   2.5%
   $33K           $0.3K  1.0%    $0.3K   0.9%
   $57K           $0.4K  0.8%    $0.4K   0.6%
   $93K           $0.7K  0.7%    $0.4K   0.4%
  $219K           $1.3K  0.6%    $0.2K   0.1%



Thanks DB2. More great data.

It occurred to me that there is a wide rage of liquor prices, so Robert Mitchum, could spend a lot more on liquor than a street sweeper, without actually consuming more alcohol.

Cigarette prices do not vary much, so John Wayne or Yul Brenner would not likely spend more on smokes than a street sweeper.

The data you provided bears that out. The rich fry their livers on higher grade hooch, but spend about the same, in dollar terms, frying their lungs.


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Pot is a carcinogen.

I do know there are chemicals in the weed that work against cancer but that is not much of a story regardless of wishful thinking.

People can not smoke anything without upping their odds of lung cancer.

Edibles possibly stomach and kidney cancer.

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So are chemicals in tobacco, but it is still legal. Banned from many more places than guns, but still generally legal.



I am for the legalization of pot. Locking people up the way we have been is crazy and much more of an expense than it is worth.

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Seems the only thing the morals police still go on the warpath about is sex. Everything else is now a source of revenue.

From the data others posted above, seems the vice taxes do land most heavily on low income people, due to their higher consumption, as a percent of income. They do, however, have the option of not engaging in vices, and writing themselves a tax cut. What ever happened to the WCTU? I see “right to lifers” all over TV, but where are the advocates for sobriety?


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To try to find out whether there is a link between recreational marijuana use and cancer, researchers from the Northern California Institute of Research and Education in San Francisco and other collaborating institutions recently conducted a systematic review and meta-analysis of studies assessing this potential association…

Dr. Ghasemiesfe and team identified 25 studies assessing the link between marijuana use and the risk of developing different forms of cancer. More specifically, eight of these studies focused on lung cancer, nine looked at head and neck cancers, seven examined urogenital cancers, and four covered various other forms of cancer…

The researchers note that the study results regarding the link between marijuana lung cancer risk were mixed — so much so that they were unable to pool the data.

For head and neck cancer, the researchers concluded that “ever use,” which they define as exposure equivalent to smoking one joint a day for 1 year, did not appear to increase the risk, although the strength of the evidence was low. However, the studies produced mixed findings for heavier users. There was insufficient evidence to link this drug to a heightened risk of nasopharyngeal carcinoma, oral cancer, or laryngeal, pharyngeal, and esophageal cancers.

Among urogenital cancers, the investigators found that individuals who had used marijuana for more than 10 years appeared to have a higher risk of testicular cancer — more specifically, testicular germ cell tumors. Once again, however, the strength of the existing evidence was low.

There was insufficient evidence that marijuana use was associated with an increased risk of other forms of cancer, including prostate, cervical, penile, and colorectal cancers.



But those were not the only studies…oh!!!