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EDITORIAL: The house always wins

Delaware wants to blow an income-tax surplus

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Lady luck is shining on Delaware. The First State is enjoying a rarity in government: a $21.3 million budget surplus. In the not-so-distant past, a governor might have thought about returning some of that bounty to the taxpayers in the form of reduced tax rates or even a cash rebate. Gov. Jack Markell, like a high roller with a pair of hot ivories, has another idea: He wants to blow a big chunk of that money on the table.

Mr. Markell, a Democrat, is betting that an $8 million subsidy will help casinos in the state to meet competition from other gambling houses in neighboring Maryland and Pennsylvania. Delaware casinos are privately held businesses; one of them is owned by a publicly traded company. They've been around awhile, and certainly knew that other casinos could open to compete with them. They should have been prepared.

It's odd that Delaware's casinos need a bailout, since Maryland, for example, was told that gambling revenue is a sure thing and would shower the state's coffers with cash. Delaware is among the country's most business-friendly states, but its casino tax is so extreme that Dover Downs has been in the red for two consecutive quarters, reports the Wilmington News Journal.

Mr. Markell isn't interested in spreading more loot about than he absolutely has to. Like many of his Democratic colleagues, he doesn't understand Economics 101; namely, that cutting taxes boosts competitiveness and collects even more revenue from economic growth. Nor can he bring himself to give the casinos a little tax relief because the casino tax is supposed to be punishment for the sin of gambling. Instead of making a rational change in an uncompetitive regulation, he wants the state to provide a straight-up bailout to casinos that need it.

Christine O'Donnell, the Republican candidate for the U.S. Senate in 2008 and 2010, tweets the folly of the Markell strategy: "Raise taxes, then bailout casinos. Dumb idea. Revenue 'windfall' came from struggling families."

Indeed. The surplus was generated by lashing working people with a higher state income tax that was put in place as an emergency measure in 2009. The "temporary" tax became permanent earlier this year. Since the state took in more than it needed, the right thing to do is return the money to the people who paid it.

But politicians don't see simple solutions. They regard it as their holy mission to find new ways to spend the money of other people. It's in the DNA. Once upon a time, politicians occasionally took pride in breaking up gambling dens. Mayor Fiorello H. LaGuardia of New York City posed for newsreel cameras with a sledgehammer he was about to take to slot machines. Mr. Markell is a lot like the casino men in Delaware's "income-tax casino," where the house always wins and nobody ever, ever gets his money back. This time, the house is the Statehouse.

The Washington Times

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