Based on Musgrave's traditional definition of horizontal equity, this
paper estimates whether the lottery tax results in a differential tax
burden by race, educational attainment, or age within households that
have equal economic positions. A second question that is addressed is
whether lottery advertising intensifies any horizontal inequities that
exist. Indeed, this study finds that, among individuals with otherwis
e identical characteristics, African Americans bear a significantly hi
gher lottery tax burden. Other minority groups and individuals with th
e lowest educational attainment also bear a larger lottery tax burden,
although the difference is not significant at the ten percent level.
In addition, the results suggest that lottery advertising has its grea
test impact on African Americans, thus intensifying the horizontal ine
quity of the lottery tax and resulting in a greater tax burden for Afr
ican Americans as compared to identical Caucasians.