It’s a new TV ad every Saturday Night Live fan will love. And it’s a pretty good lesson in economics, too.
The latest New Hampshire Lottery ad is a spot-on parody of the classic SNL “Land Shark!” sketch, with the same painfully gullible woman on one side of the door and “that clever shark” on the other.
Only in the lottery’s version, it’s a “Tax Shark.”
The victim is a woman who has just won $1 million in the Massachusetts lottery. The doorbell rings, and the Tax Shark’s shenanigans begin, just like in the original SNL sketch.
“You’re that no-good Massachusetts tax shark that’s been swimming around stealing all our lottery winnings,” the woman says before falling prey to his aquatic charms.
The narrator then makes his pitch: Why buy lottery tickets in Massachusetts where, if you’re lucky enough to win, state taxes will take up to nine percent of your winnings? You can buy them in tax-free New Hampshire instead!
When Massachusetts voters passed a so-called “Millionaire’s Tax” last year, there was a great deal of discussion about the impact it may have on high-wage earners and affluent residents. That was one reason the Massachusetts Fiscal Alliance opposed the new tax.
“The number one destination for where Massachusetts taxpayers flee to is New Hampshire,” Paul Craney, spokesman for the Massachusetts Fiscal Alliance, said this week. “Simply by moving to New Hampshire, they become more affluent. Massachusetts Gov. Maura Healey, Speaker Ron Mariano, and Senate President Karen Spilka do not seem to care; this week, they passed a very modest tax relief package into law, including a marriage penalty for high-income earners.
“Only in Massachusetts does a tax relief package include tax hikes.”
But there was hardly any discussion at the time about the impact of the “millionaire’s tax” on the state’s future lottery revenues. Now it’s got a starring role in a TV ad.
It is too soon to tell if Bay State Powerball players will wait to pick their numbers north of the state line. However, there is plenty of data to show that decisions in Beacon Hill impact consumer behavior, and the Granite State gets the benefit.
For example, in 2020, the Josiah Bartlett Center noted revenues from the state tobacco tax “rose significantly” in the months after Massachusetts banned the sale of flavored tobacco products, including menthol cigarettes.
“Cigarette smokers and flavored tobacco scavengers from Massachusetts produced a surge of New Hampshire tobacco tax revenue that almost single-handedly prevented a business tax increase,” according to the JBC.
And when Massachusetts implemented a four-month ban on the sale of vaping products in 2019, New Hampshire retailers responded, “Thank you, Gov. Baker!” as Granite State smoke shops saw a rush of Bay State customers.
Gov. Chris Sununu cheered in 2021 when it appeared Massachusetts planned to remain in the Transportation and Climate Initiative, a cap-and-trade scheme that would have added around 20 cents per gallon to the price of gasoline in the Bay State. “There’s no doubt that if you start adding a 20 or 25 cent extra gas tax, especially around the border of towns of Massachusetts —Haverhill, Methuen, Lawrence — there’s no doubt folks are going to come across the border to get gas and buy their groceries and whatever else they’re going to be purchasing,” Sununu said at the time.
But Gov. Baker (R-Mass.) pulled his state out of the multi-state compact, which collapsed soon after.
And has the Bay State’s ban on fireworks kept them out of the state? Or has it kept the flow of cars headed up I-93 every Independence Day weekend?
The lesson here is that policy matters, and poorly thought-out policy often has consequences its supporters didn’t intend.
“Whether it’s tax policy or tobacco bans, there are always unintended consequences, and the market is going to respond,” said Peter Brennan, executive director of the New England Convenience Store and Energy Marketers Association. “In the case of the lottery, it means lucky New Hampshire residents keep more of their winnings thanks to Massachusetts’ short-sighted tax policy.”
On Thursday, October 12, Brennan will be participating in a roundtable discussion on the impact of government policy on consumer behavior and the challenge of unintended consequences. (NHJournal’s Michael Graham will moderate the discussion.)
Also on the panel will be Edgar Domenech, a former New York City sheriff and former deputy director of the Bureau of Alcohol, Tobacco and Firearms. Domenench’s role will be to discuss the non-revenue-related consequences of these bans, like promoting illicit sales and a black-market economy.
Ray Chadwick with the Granite State Taxpayers organization says the “Tax Shark” ad highlights “why the population of Massachusetts has grown only 1 percent over last four years, and actually declined in the last two years. In tax-free New Hampshire, where taxpayers get to keep more of their hard-earned income, our population has grown by 3 percent over the same period.”
“New Hampshire has many Advantages, and our tax free environment is an important advantage over other states,” Chadwick adds. “Let’s keep it that way.”
So, how many lottery tickets will be bought in New Hampshire by Bay Staters hoping to evade the “Tax Shark?”
Does it matter? As long as Massachusetts sticks with its high-tax, heavily regulated public policies, New Hampshire retailers have already won.