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The Taxman Cometh16 February 2002
The old cliche that the only sure things in life are "death and taxes" might be wrong after all. With our ever-escalating medical knowledge, there is no telling how long we will live in the future, or whether we'll ever die at all. Artificial hearts, artificial lungs, stem cells, DNA recombinations and "who-knows-what-else" are pushing the envelope on life-expectancy to the point where there might not be any envelope after all.
One can feel sorry for the generation that will be the last generation to die (barring accidents to the "immortals," of course) as they will look upon their offspring with a mixture of delight and longing. Most of you reading this will probably not be among the first of the immortals, but you never know.
One thing we do know, of course, is that the second part of that cliche, the one to do with taxes, will probably outlast death itself. Not to put too fine a point on this but -- you are taxed on your salary by the federal, state and often local governments; you are taxed on the property you bought with the money you managed to keep after your salary was taxed; then you are taxed on the products you buy with that same "after-tax" money. You are then taxed on the various entertainments you love and then, to really rub your snout in it, there are all sorts of "surcharges" on your hotel bills, such as "room occupancy surcharge," "energy surcharge," "maid service surcharge" when you travel.
In fact, if you are planning on dying soon, you will even get taxed on your death -- so a good recommendation would be for you to wait for immortality to avoid the "death tax." Of course, if you have been very successful in life -- even after all those taxes have been extracted, that is -- the estate that you leave to your loved ones will also be taxed. That's taking love of country a bit far, don't you think, to include it as a recipient of your hard-earned, after-tax estate dollars? But you must.
Here's a truth you can take to the IRS at audit time: As long as there are politicians making promises that ultimately require your money to pay for, there will be taxes, taxes and more taxes.
So why is anyone surprised when the casino, taking a leaf from the tax pages of the government, taxes us as well?
And that is just what the casinos do in some of their games, they extract a tax from the players. But being clever little devils, those casino mathematicians who figured out how to tax players, also learned how to make it seem painless -- almost as painless as the withholding tax on people's pay checks -- by taking another leaf from the government's "play" book. If you never had the money in your hot little hands, you will never miss the money!
Here's how that bit of psycho-mathology works:
Let us take a very simple game such as roulette. You have 38 pockets where the ball can land. Let us say you bet on one pocket, number 17, and you put $1 as a wager on this pocket. You have one way to win (number 17) and 37 ways to lose (numbers 1-16, 18-36, 0 and 00). In a game without taxes (called a "fair" game) that followed the probabilities perfectly, you would win $37 the one time your number hit and lose a total of $37 on the 37 times it didn't hit. You would be even.
But the casino can't make money on you in a game such as that. So, instead of paying you $37 on the one time you win, the casino pays you $35 dollars. By doing so, the casino has charged you a tax on your win -- that tax is slightly more than five percent. By the way, the casino (and the government) will not charge a tax when you lose. If you lose, you get to lose just what you bet and no more.
Now, most players who win that $35 will jump up and down and think it is something wonderful. Few realize that what actually happened was this: The casino took back two dollars of yours and kept it for itself. Just like the payroll tax. You have a take home pay of $350, but the casino took home $20 of your money!
The casino knows that had they paid you $37 and then reached out and said: "Excuse me, Sir, but I'm taking two dollars for myself," most people would get upset -- just as most people would get upset if they had to write a check to the government every week, or every two weeks, when they were paid their full salaries without any withholding tax. If people had to write such a check, it would drive home just how much of their money the government was confiscating and there would be a tax revolt of unprecedented proportions. The tea would, metaphorically, float in the harbor once more.
But by siphoning off the money before the player gets it, the edge is taken off the house edge so to speak and people docilely applaud their lucky hit.
Not all casino games are structured in such a way, however. Some do not extract a tax. Some are simply structured for the casino to win more decisions than the players. Blackjack has the casino win approximately 48 percent of the time, lose approximately 44 percent of the time, and tie approximately 8 percent of the time. (With doubles and splits and 3 to 2 payoffs for blackjacks, players don't face such a bad house edge as at first it would appear from the won-loss-tie figures.) On the Pass Line and Come bets at craps, the house wins 251 decisions and the players win 244 decisions. That seven decision shortfall gives the casino a 1.41 percent edge. Not too bad.
One thing you will notice (or, actually, the one thing you won't notice) is that the casino extracts its money from the players subtly. Play blackjack and you'll win some and lose some. It will only be over time that you notice you have lost some more than the sum you have won. That same dictum holds for most of the other table games as well. The house edge works in the dark, so to speak, just like Congress, even though everything appears to be taking place before your very eyes.
When death loses its sting, the taxman will still cometh for you!
This article is provided by the Frank Scoblete Network. Melissa A. Kaplan is the network's managing editor. If you would like to use this article on your website, please contact Casino City Press, the exclusive web syndication outlet for the Frank Scoblete Network. To contact Frank, please e-mail him at email@example.com.
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