The Trouble With Connecticut’s Video Game Sin Tax Bill

An interesting article on The Atlantic examines why sin taxes like the one proposed for video games by Connecticut State Rep. Debralee Hovey (R-112th District) never really do anything productive. You may recall that Hovey, who represents the district that includes Newtown, Connecticut, proposed a 10 percent sin tax on violent video games rated "Mature" by the ESRB.

While Hovey says that she wants to leave the parenting to parents and that the tax isn't meant to dissuade video game purchases, that is traditionally what a sin tax is designed to do – among other things.

"I have no interest in becoming a nanny or parent to all these children or preventing the number of video games people buy," she says. "My goal is to ramp up awareness of how realistic the content is."

Adam Hoffer, an economics professor at the University of Wisconsin-La Crosse who is one of three co-authors of a new working paper that examines sin taxes, says that these taxes on products and services considered to be immoral or bad for you are not the magic remedy lawmakers hope they will be.

"Video games [are] the vice right now, what's next down the road?" he said. "Are we going to tax violent movies? TV shows? Hey, why not an HBO tax?"

Hoffer thinks that if Connecticut feels so strongly that parents should learn about video game addiction and anti-social behavior, then it should collect revenue from other sources or allocate funds already put aside for public health to pay for it.

"I do like the [Connecticut] bill because it deals with an education component," says Michael Thomas, another a co-author of the working paper, and an economics and finance professor at Utah State's Huntsman School of Business. "But I fear that what happens in reality is that the expenditures end up getting put in a general fund or the specific public health part gets dropped from the bill."

Thomas says that sin tax revenues rarely ever get used for what they are collected for. Often they are thrown into a general fund or they are put aside but then raided for other things – replaced by an IOU. Sometimes sin taxes are simply revenue grabs politically justified in the wake of tragedy.

William Shughart, the third author of the working paper and a professor in the economics and finance department at Utah State University, says that sin taxes are often just a new way to create a revenue stream for governments because raising taxes on things like income or raising the sales tax in a state is a "non-starter" for most constituents.

"Raising taxes in general, on income, is a non-starter," said Shughart. "So you have to find something only a minority of people take part in and then tax it."

Video games and the people that play them are the prime example of what he calls a "politically vulnerable group."

"It's a classic sin tax situation," Shughart says. "We are told, we must tax violent video games under some claim that they harm the people playing them, and we're told those harms are spilling over onto the rest of us who don't play these game[s]."

Ultimately Shughart thinks the sin tax bill has a good probability of passing in Connecticut – even though there is no data to tie video games to real world violent acts.

Source: The Atlantic

 

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