If the Bible is correct, the wages of sin are death. In this life, however, Iowans’ vices — smoking, drinking and gambling — generate a tidy sum for the state treasury.
In fiscal 2012, Iowa reaped $710.6 million from so-called “sin taxes.” Although that was 4.8 percent of the state’s total revenues of $14.65 billion, it was far less than the $3.7 billion in individual income taxes and $2.1 billion in sales taxes Iowans paid in fiscal 2011.
Big money across the nation
Iowa and other states collected more than $50 billion in sin taxes in 2011.
Pennsylvania tops them all with $3.85 billion in sin taxes, but Nevada’s $1.01 billion, including $860 million from casinos, makes up a larger portion of its overall revenues. It pulls in 5.8 percent of its $17.6 billion in state revenues from sin taxes, according to 24/7 Wall St., an Internet-based financial news service.
In Iowa, sin tax revenue accounted for 4.8 percent of the state’s revenues, the Legislative Services Agency reports. However, the agency and 24/7 Wall St. employ different methodology, making an apples-to-apples comparison impossible. Iowa’s sin tax collections would have ranked fourth on the 24/7 Wall St. list, but Iowa isn’t even in the site’s top 10.
$233 per person in Iowa
Perhaps it’s a testament to Iowans’ virtue, but the $233 per capita in sin tax collections is low compared with states profiting most from those taxes.
Delaware collects more than twice as much — $526 per person — despite taking in just $472 million in sin taxes. In Nevada, the per capita take from those sources is $375. Pennsylvania’s $3.8 billion equals $303 per capita, because its population is more than four times Iowa’s
Gaming revenue is tops
In Iowa, gaming revenue amounts to 42 percent of the $710.6 million collected in 2012, according to the agency’s Fiscal Services Division. Cigarette and tobacco taxes amount to another 32 percent.
The agency projects tobacco-related tax revenue falling from $225 million to $218 million by fiscal 2014. Increases from other sin taxes will boost the overall take to $718.7 million.
BUT a vice is still a vice
As big as those numbers are, opponents of these vices say the taxes don’t necessarily cover the costs associated with them.
Casinos “cater to the people who lose disproportionately, and those are the ones who cost the rest of us because they lose their jobs, get divorced, attempt suicide and steal,” said Tom Coates of Des Moines, a gambling opponent.
Smoking costs far exceed revenues from tobacco products, said Jen Schulte, Iowa government relations director for the American Cancer Society. She pegs Iowa’s health care costs directly caused by smoking at $1.01 billion a year.
Curated by James Q. Lynch/The Gazette.
Sources: Iowa Legislative Services Agency; 24/7 Wall St.