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Who knew voodoo economics worked for lotteries?

Apparently Mike Easley did. And he convinced legislative leaders, fellow Democrats every one, that Ronald Reagan had it right after all: You can increase government revenue by cutting taxes.

When Reagan came out with that during his 1980 presidential campaign, his political foes hooted. George H.W. Bush, a competitor for the Republican nomination, tagged the plan with the voodoo put-down. Bush later recanted when he accepted the second banana spot on Reagan's ticket.

Anyway, Reagan's tax cuts helped rev up the economy enough to propel significant growth in actual tax revenue during the 1980s. The deficit still soared on account of ravenous spending, largely for a military buildup, but that was the price of winning the Cold War.

The Easley administration isn't fighting communism, but it does want to spend more money for education. The lottery, which was supposed to be a cash cow, is more like a wobbly calf, missing its first-year income projection by more than $100 million.

Here's where Easley turns into Reagan: He says the state can generate more economic activity -- sell more lottery tickets -- by cutting the lottery tax.

What's the lottery tax? It's the amount the state takes on each lottery ticket it sells: 50 cents per dollar, on average.

A whopping 50 percent tax rate will suppress a lot of economic activity.

This same principle is illustrated all the time. Coming up is another tax-free weekend. People will rush to the stores for clothing, computers and school supplies just to save a few pennies per dollar. Conversely, the recent increases in the state cigarette tax have seriously depressed consumption.

It's a tried-and-truism: If you want to discourage an activity, tax it; to encourage an activity, cut or eliminate the tax.

In the case of the lottery, the tax is the gross revenue the state keeps for itself. In the original authorizing legislation, this was 50 percent. That is split up for administration and advertising, retailer fees and educational programs. The other 50 percent returns to consumers in the form of prizes. That's the total value to lottery players of all those tickets they buy.

Only they haven't been buying enough tickets, according to the governor. He wants to stir up their interest by raising the payout to 57 or 58 percent. That will cut the state's take, or tax, to 42 or 43 percent. A compliant legislature agreed, giving the lottery commission the discretion of deciding how much to allocate for winnings.

Critics are calling this ludicrous, but the suddenly Reaganesque governor is probably on target. Even though the portion of lottery income dedicated to education will decrease, better odds of winning likely will entice players to buy so many more tickets that net proceeds will increase -- although surely by nowhere near the 50 percent that the governor predicted. No one should expect more than a modest bump in profits.

Where I fault this scheme is in its purpose. Buying lottery tickets is not an activity the state should encourage. Far from it. Gambling is foolhardy for those who participate and ruthlessly exploitative on the state's part. Even with higher payouts, the lottery doesn't offer a good deal. I mean, how smart is someone who voluntarily pays a 42 percent sales tax?

North Carolinians would be better off spending their money on something that gives better value. Sure, it's their own business, but the state shouldn't lure them into making poor choices.

Oh, heck. We've had this conversation before. I ought to look on the bright side.

Now that Easley and legislative leaders have embraced Ronald Reagan's philosophy, I can't wait for rates to fall on sales taxes, personal and corporate income taxes and whatever other taxes we don't have any choice about paying.

Taxpayers will get a break, our economy will perk up, and the politicians will get their hands on more money in the long run. Jackpot!

Doug Clark can be contacted at dgclark@news-record.com and 373-7039.