A Superior Court judge ruled today that the lottery legislation is not a tax, and threw out a lawsuit challenging how lawmakers created the state lottery.
Superior Court Judge Henry "Chip" Hight of Franklin County dismissed the lawsuit filed by the N.C. Institute for Constitutional Law representing several taxpayers and interest groups.
"No person is forced to purchase a lottery ticket," Hight wrote in an 11-page ruling. "The lottery act does not impose a tax on the purchaser of a lottery ticket."
The state's first lottery tickets are scheduled to go on sale March 30.
At a hearing Monday at the Wake County courthouse, Robert Orr, executive director of the law institute, argued that the lottery money earmarked for education — about 35 cents for every dollar spent on tickets — was equivalent to a tax. Therefore, Orr argued, lawmakers failed to follow procedure required in the state constitution for revenue bills.
Norma Harrell, the state's lawyer, said the lottery legislation wasn't a revenue bill and lawmakers didn't violate the state constitution.
The plaintiffs complained that the House and Senate each failed to hold two roll-call votes on separate days for the bill, as required for approving tax measures.
"A tax is a forced contribution to government which has no necessary immediate relationship to a benefit conferred," Hight wrote in his ruling. No one is forced to play the lottery, he wrote.
Hight also ordered the plaintiffs to pay the state's legal expenses.
Robert Orr, a lawyer with the North Carolina Institute for Constitutional Law, represented many of the plaintiffs.
"We are in the process of talking with our clients and our board of directors about the next step or steps to be taken," Orr said in a prepared statement.
The lawsuit was filed in December, 3 1/2 months after the lottery became law.
More than 4,000 lottery ticket terminals have been installed statewide, 150 lottery workers have been hired and an advertising campaign is scheduled to promote the first sales of scratch-off tickets March 30.
Although state rulings are not precident-setting in other states (or in federal law), I still think this is a landmark ruling for the lottery industry.
I'm not sure if there has ever been a ruling like this one.
A judge ruled that the lottery is not a tax. That completely destroys one of the arguments put forth continually by people who think the lottery is some kind of evil social engineering plot against poor people. ("Poor people get taxed more than wealthy people because they play the lottery much more, so they are being taxed much more.")
I have always maintained that was a completely wrong-headed opinion, and now this ruling confirms that. Excellent.
And all the people said, "Amen!" I've often wondered why some people worry about what the poor are doing, especially if the poor do not affect their particular lifestyle.
Finally, all North Carolinians, the poor, the middle-class, and the wealthy should be celebrating that North Carolina has a lottery because the lottery benefits everyone: people who win the lottery invest their dollars back into the community -- their purchasing power increases substantially -- creating jobs for everyone, too.
<< Hight also ordered the plaintiffs to pay the state's legal expenses. >>
Cool. If it gets more expensive for all the meddlesome moralizers who think they know what's bad for us to continue their meddling, maybe they'll cut back a bit.
<< Although state rulings are not precident-setting in other states (or in federal law), I still think this is a landmark ruling for the lottery industry.
I'm not sure if there has ever been a ruling like this one.
A judge ruled that the lottery is not a tax. >>
Even a case decided by a town justice in West Upper Podunk can constitute precedent, which in its simplest sense is any previous ruling, so any court that's aware of this ruling could potentially cite it as precedent. Of course you're right that it isn't mandatory precedent in any court not under the authority of the court issuing the ruling, so other courts are also free to ignore it. Regardless, I'm skeptical that it will ever be considered a landmark case, and there's still the possibility that the ruling could be overturned on appeal, possibly in a court that does have authority over a much wider area. This case could just as easily have been about any bill that raises revenue, such as driver's license or hunting license fees. Since it was about procedural issues concerning enactment of state laws, similar NC cases could easily turn on minor points, and the issues may be completely irrelevant in other states where even a similar law will be worded differently.
It's interesting to note that the state's lawyer said that the legislation wasn't a revenue bill. I don't see how any rational person can believe that. Lotteries are clearly started because of their ability to generate revenue rather than to provide a service that the public may want. What differentiates "revenue" from "tax" probably isn't at all clear, and may not be consistent in cases involving slightly different circumstances. There's probably wide agreement that nobody has to hunt, so therefore hunting licenses aren't mandatory and don't constitue a tax, even though they clearly generate revenue. Sales tax only applies to items that you buy, and buying them is voluntary, so is it really a tax based on the judge's reasoning? If you voluntarily buy a toaster the state compels you to give them x% of the price, and if you voluntarily buy a lottery ticket the state compels you to give them the portion of the price that goes directly to the state. As a practical matter, what's the difference between a lottery ticket that costs $1.00, of which the state immediately skims 50 cents, and a lottery ticket that costs 50 cents, but is also subject to a 100% sales tax?
I certainly agree that the ruling makes sense, but I don't see it as a big deal. As you note, it has no mandatory precedent in other states, and the argument that lotteries are a kind of tax is mostly just a PR tool and occasionally a convenient roadblock for those opposed to lotteries. IIRC, when California joined Megamillions the lawsuits were about what was permitted by the original law authorizing a state lottery, which had nothing to do with taxes. There will always be people who disapprove of lotteries and some of them will be in various legislative bodies. The latter will use whatever argumewnts and roadblocks they think will work, with plenty of vocal support from the moralizers who gave them their jobs.
The concept of lotteries not being a tax is pretty widespread (they are widely defined as a source of non-tax revenue) and I do believe there have been several rulings - though I must confess I cannot name individual states off the top of my head.
Glad to see there is a judge somewhere that is capable of issuing such a clear ruling.
And all the people said, "Amen!" I've often wondered why some people worry about what the poor are doing, especially if the poor do not affect their particular lifestyle.
Finally, all North Carolinians, the poor, the middle-class, and the wealthy should be celebrating that North Carolina has a lottery because the lottery benefits everyone: people who win the lottery invest their dollars back into the community -- their purchasing power increases substantially -- creating jobs for everyone, too.
If you're a member of society everyone else in that society affects your lifestyle one way or another. Right now 49% of US voters are being governed by somebody elected by the other 51%, which is about how things worked 10, 20 and 50 years ago, too.
For the most part, the only people who get a tangible benefit from lotteries are the small percentage who win more than they lose, the politicians who raise revenue without raising taxes, and the people who don't play the lottery. Anyone who's an average player has lost about 50% of what they've bet and it hasn't reduced their taxes by the amount they've lost. The only benefit the average players get is a license to dream about being rich. Any money reinvested in the local area by winners is offset by the money that the losers didn't get the chance to spend on something other than the losing tickets. The money that the winners spend during their month-long vacation to Bora Bora definitely doesn't do anything to benefit the community in which they bought the ticket.
Many of the arguments against lotteries are valid. There are plenty of people spending money on tickets that they really can't afford to spend, but you can't legislate reasonable decision making. As long as it doesn't directly injure others we should all be free to do things that have risk or even be downright stupid.
I can't help but chuckle while reading this thread. A few years ago I went out on a "d-a-t-e" (yikes) and to this day I remember when I mentioned the lottery and the man I met for dinner said to me condescendingly, "Oh, Dear. Don't you know that's just the way they tax the poor?" Needless to say, I never had dinner with him again. But I also swore that when I became wealthy, I'd never change who I am. I'll only change some of my material possessions, but I'll be the same poor slob in my heart and won't speak to anyone in a patronizing manner just because I can afford nicer things.
Something is only a tax if you are required to pay it. The lottery may very well become an addictive habit for some people, but until they close all the bars and liquor stores or stop selling cigarettes, it's a lot less harmful than a couple of martinis and a ticket won't lead to cancer or a head-on collision. Just don't look up your numbers while driving!
The concept of lotteries not being a tax is pretty widespread (they are widely defined as a source of non-tax revenue) and I do believe there have been several rulings - though I must confess I cannot name individual states off the top of my head.
Glad to see there is a judge somewhere that is capable of issuing such a clear ruling.
Well, I make it a point to stay on top of these things, and I have never heard of such a ruling. The fact is that there just isn't much of an opportunity to have a case like this heard.
To say it is "widespread" is false for a number of reasons, first and foremost, just the fact that it is so rare to have a case like this in front of a judge.
As to KY Floyd's remarks, I believe you are incorrect concerning the legal terminology. The word "precident" carries legal weight, and to say that one state's ruling creates precident in another state is incorrect. Even a "non-manditory precident". The only thing it can do is to guide a judge in one state to understand what motivated a judge in another state. That is the complete extent of the legal weight in another state. I have done some research with a very good attorney in this area, so I am well familiar with this concept.
The only thing that would set precidence between states could be constitutional issues, and this does not appear to involve any constitutional issues.
I can't help but chuckle while reading this thread. A few years ago I went out on a "d-a-t-e" (yikes) and to this day I remember when I mentioned the lottery and the man I met for dinner said to me condescendingly, "Oh, Dear. Don't you know that's just the way they tax the poor?" Needless to say, I never had dinner with him again. But I also swore that when I became wealthy, I'd never change who I am. I'll only change some of my material possessions, but I'll be the same poor slob in my heart and won't speak to anyone in a patronizing manner just because I can afford nicer things.
Something is only a tax if you are required to pay it. The lottery may very well become an addictive habit for some people, but until they close all the bars and liquor stores or stop selling cigarettes, it's a lot less harmful than a couple of martinis and a ticket won't lead to cancer or a head-on collision. Just don't look up your numbers while driving!
Excellent! I LOVE how you stood up for your principles! The guy starts spouting some garbage about the lottery and you give him the boot -- how great is that?!
Excellent! I LOVE how you stood up for your principles! The guy starts spouting some garbage about the lottery and you give him the boot -- how great is that?!
Although state rulings are not precident-setting in other states (or in federal law), I still think this is a landmark ruling for the lottery industry.
I'm not sure if there has ever been a ruling like this one.
A judge ruled that the lottery is not a tax. That completely destroys one of the arguments put forth continually by people who think the lottery is some kind of evil social engineering plot against poor people. ("Poor people get taxed more than wealthy people because they play the lottery much more, so they are being taxed much more.")
I have always maintained that was a completely wrong-headed opinion, and now this ruling confirms that. Excellent.
Welcome to the lottery world North Carolina!!!!!
Glad to see you join us even though a few people put up a fuss for who knows whatever reason.
Brad
I have a suggestion for Robert Orr - DROP IT!
Oh,and one more thing...pay the cashier on your way out."Hight also ordered the plaintiffs to pay the state's legal expenses."
Darn it! It's about d#mn time someone in North Carolina got some B#*ls. Way to go Hight!
And all the people said, "Amen!" I've often wondered why some people worry about what the poor are doing, especially if the poor do not affect their particular lifestyle.
Finally, all North Carolinians, the poor, the middle-class, and the wealthy should be celebrating that North Carolina has a lottery because the lottery benefits everyone: people who win the lottery invest their dollars back into the community -- their purchasing power increases substantially -- creating jobs for everyone, too.
<< Hight also ordered the plaintiffs to pay the state's legal expenses. >>
Cool. If it gets more expensive for all the meddlesome moralizers who think they know what's bad for us to continue their meddling, maybe they'll cut back a bit.
Todd wrote:
<< Although state rulings are not precident-setting in other states (or in federal law), I still think this is a landmark ruling for the lottery industry.
I'm not sure if there has ever been a ruling like this one.
A judge ruled that the lottery is not a tax. >>
Even a case decided by a town justice in West Upper Podunk can constitute precedent, which in its simplest sense is any previous ruling, so any court that's aware of this ruling could potentially cite it as precedent. Of course you're right that it isn't mandatory precedent in any court not under the authority of the court issuing the ruling, so other courts are also free to ignore it. Regardless, I'm skeptical that it will ever be considered a landmark case, and there's still the possibility that the ruling could be overturned on appeal, possibly in a court that does have authority over a much wider area. This case could just as easily have been about any bill that raises revenue, such as driver's license or hunting license fees. Since it was about procedural issues concerning enactment of state laws, similar NC cases could easily turn on minor points, and the issues may be completely irrelevant in other states where even a similar law will be worded differently.
It's interesting to note that the state's lawyer said that the legislation wasn't a revenue bill. I don't see how any rational person can believe that. Lotteries are clearly started because of their ability to generate revenue rather than to provide a service that the public may want. What differentiates "revenue" from "tax" probably isn't at all clear, and may not be consistent in cases involving slightly different circumstances. There's probably wide agreement that nobody has to hunt, so therefore hunting licenses aren't mandatory and don't constitue a tax, even though they clearly generate revenue. Sales tax only applies to items that you buy, and buying them is voluntary, so is it really a tax based on the judge's reasoning? If you voluntarily buy a toaster the state compels you to give them x% of the price, and if you voluntarily buy a lottery ticket the state compels you to give them the portion of the price that goes directly to the state. As a practical matter, what's the difference between a lottery ticket that costs $1.00, of which the state immediately skims 50 cents, and a lottery ticket that costs 50 cents, but is also subject to a 100% sales tax?
I certainly agree that the ruling makes sense, but I don't see it as a big deal. As you note, it has no mandatory precedent in other states, and the argument that lotteries are a kind of tax is mostly just a PR tool and occasionally a convenient roadblock for those opposed to lotteries. IIRC, when California joined Megamillions the lawsuits were about what was permitted by the original law authorizing a state lottery, which had nothing to do with taxes. There will always be people who disapprove of lotteries and some of them will be in various legislative bodies. The latter will use whatever argumewnts and roadblocks they think will work, with plenty of vocal support from the moralizers who gave them their jobs.
Hey Todd:
The concept of lotteries not being a tax is pretty widespread (they are widely defined as a source of non-tax revenue) and I do believe there have been several rulings - though I must confess I cannot name individual states off the top of my head.
Glad to see there is a judge somewhere that is capable of issuing such a clear ruling.
And all the people said, "Amen!" I've often wondered why some people worry about what the poor are doing, especially if the poor do not affect their particular lifestyle.
Finally, all North Carolinians, the poor, the middle-class, and the wealthy should be celebrating that North Carolina has a lottery because the lottery benefits everyone: people who win the lottery invest their dollars back into the community -- their purchasing power increases substantially -- creating jobs for everyone, too.
If you're a member of society everyone else in that society affects your lifestyle one way or another. Right now 49% of US voters are being governed by somebody elected by the other 51%, which is about how things worked 10, 20 and 50 years ago, too.
For the most part, the only people who get a tangible benefit from lotteries are the small percentage who win more than they lose, the politicians who raise revenue without raising taxes, and the people who don't play the lottery. Anyone who's an average player has lost about 50% of what they've bet and it hasn't reduced their taxes by the amount they've lost. The only benefit the average players get is a license to dream about being rich. Any money reinvested in the local area by winners is offset by the money that the losers didn't get the chance to spend on something other than the losing tickets. The money that the winners spend during their month-long vacation to Bora Bora definitely doesn't do anything to benefit the community in which they bought the ticket.
Many of the arguments against lotteries are valid. There are plenty of people spending money on tickets that they really can't afford to spend, but you can't legislate reasonable decision making. As long as it doesn't directly injure others we should all be free to do things that have risk or even be downright stupid.
I can't help but chuckle while reading this thread. A few years ago I went out on a "d-a-t-e" (yikes) and to this day I remember when I mentioned the lottery and the man I met for dinner said to me condescendingly, "Oh, Dear. Don't you know that's just the way they tax the poor?" Needless to say, I never had dinner with him again. But I also swore that when I became wealthy, I'd never change who I am. I'll only change some of my material possessions, but I'll be the same poor slob in my heart and won't speak to anyone in a patronizing manner just because I can afford nicer things.
Something is only a tax if you are required to pay it. The lottery may very well become an addictive habit for some people, but until they close all the bars and liquor stores or stop selling cigarettes, it's a lot less harmful than a couple of martinis and a ticket won't lead to cancer or a head-on collision. Just don't look up your numbers while driving!
I live in North Carolina. This is a great day for this state. All I can say is "Let the Games Begin".
Hey Todd:
The concept of lotteries not being a tax is pretty widespread (they are widely defined as a source of non-tax revenue) and I do believe there have been several rulings - though I must confess I cannot name individual states off the top of my head.
Glad to see there is a judge somewhere that is capable of issuing such a clear ruling.
Well, I make it a point to stay on top of these things, and I have never heard of such a ruling. The fact is that there just isn't much of an opportunity to have a case like this heard.
To say it is "widespread" is false for a number of reasons, first and foremost, just the fact that it is so rare to have a case like this in front of a judge.
As to KY Floyd's remarks, I believe you are incorrect concerning the legal terminology. The word "precident" carries legal weight, and to say that one state's ruling creates precident in another state is incorrect. Even a "non-manditory precident". The only thing it can do is to guide a judge in one state to understand what motivated a judge in another state. That is the complete extent of the legal weight in another state. I have done some research with a very good attorney in this area, so I am well familiar with this concept.
The only thing that would set precidence between states could be constitutional issues, and this does not appear to involve any constitutional issues.
I can't help but chuckle while reading this thread. A few years ago I went out on a "d-a-t-e" (yikes) and to this day I remember when I mentioned the lottery and the man I met for dinner said to me condescendingly, "Oh, Dear. Don't you know that's just the way they tax the poor?" Needless to say, I never had dinner with him again. But I also swore that when I became wealthy, I'd never change who I am. I'll only change some of my material possessions, but I'll be the same poor slob in my heart and won't speak to anyone in a patronizing manner just because I can afford nicer things.
Something is only a tax if you are required to pay it. The lottery may very well become an addictive habit for some people, but until they close all the bars and liquor stores or stop selling cigarettes, it's a lot less harmful than a couple of martinis and a ticket won't lead to cancer or a head-on collision. Just don't look up your numbers while driving!
Excellent! I LOVE how you stood up for your principles! The guy starts spouting some garbage about the lottery and you give him the boot -- how great is that?!
Excellent! I LOVE how you stood up for your principles! The guy starts spouting some garbage about the lottery and you give him the boot -- how great is that?!
win lawsuit 450 370 lose lawsuit 718 795