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Uncomfortable math

by Brian Clarey

Chances are if you walk outside right now, pick up a rock and throw it in any direction, it will land within a quarter-mile of an internet sweepstakes parlor. They’ve grown — some would say festered — like the kudzu that threatens to overtake Wendover Avenue since the beginning of the year, when a district court judge’s interpretation of an existing NC law opened a loophole for casino-style electronic gaming all across the state.

Since then, these businesses have operated in a legislative no-man’s land, bereft of regulation and tax schedules save for normal business fees.

Back in February, HB 1537 was created to tax and regulate this burgeoning industry. The man who sponsored it, Rep. Earl Jones, said it would contribute up to $500 million to our state’s depleted coffers. But Jones, up for re-election this year, was knocked out in the Democratic primary by Marcus Brandon, and he has since seen the state Senate pass a bill that would ban the machines outright, which happened last week. The House followed suit on Wednesday, and now the bill will go before Gov. Perdue, who has indicated that she will sign it.

The situation brings with it some uncomfortable math. The state budget signed by Gov. Beverly Perdue last month comes with a shortfall of at least $800 million, due in large part to drops in income and property taxes that were once paid by people who no longer have income or property. The shortfall has necessitated serious cuts in health and human services, education and — for some, the most grievous — tuition subsidies for UNC’s out-of-state athletes, which alone will save the state about $9 million.

But cutting expenditures is what you do when you don’t have enough money to pay your bills, that and perhaps look for other streams of revenue.

This could be accomplished by raising taxes across the board — which is extremely unpopular and unlikely to happen in a year of precarious elections. And contrary to what the Tea Party says, cutting taxes will not raise revenues except on the most extreme ends of the Laffer Curve.

Or we could have helped foster an industry that is already legal according to existing state law, one that is completely voluntary like smoking or drinking, applied common-sense regulation and tax structure — not to mention allow the 10,000 or so people currently working in said industry to keep their jobs — and made up almost 65 percent of the deficit.

Instead we voted to eradicate the one industry in this state that is actually growing and could contribute in a meaningful way to our tax base, and we’ll shrug our shoulders when the issue of the shortfall comes up, citing the moral high ground as a shield for our ignorance and short-sightedness — the children, the poor and the Tarheels be damned.

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