Thesis advisor: S.J. Richard A. McGowan / This thesis will examine the free rider problem in a unique setting: how states compete over gambling revenues. As the economy tightens, states continue to look for revenue streams to supplement their already strained budgets. Gambling is an attractive option for many states, as it is a steady and reliable source of income each month. With appealing funds available, different states have intensified their competition, authorizing new casinos on neighboring state borders to entice out-of-state visitors. States receive money from these visitors but are not responsible for their social problems, which they bring back to their home states. This phenomenon is a modern incarnation of the free rider problem. This paper explores three main questions. To begin, does the gambling market expand with the introduction of a new state's gambling facilities? Next, are states able to successfully reclaim revenues? Lastly, what are the effects of changes in tax rates on state revenues? These questions are examined in two regions. First, the newly authorized slots in Pennsylvania are having a direct impact on the casinos in Atlantic City, NJ. Also, a variety of tax changes in the Midwest states of Illinois, Indiana, and Missouri is shifting revenues among these three states. The free rider problem relating to states and gambling will continue to be an important and relevant issue for years to come. / Thesis (BS) — Boston College, 2008. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics. / Discipline: College Honors Program.

Bakalauro baigiamajame darbe analizuojami mokesčių teoriniai pagrindai, mokesčių našta ir jos poveikis verslui. Teoriniu aspektu išsamiau nagrinėjami trys pagrindiniai mokesčiai (PVM, pelno mokestis, akcizai) Lietuvos statistikos departamento duomenimis turintys didžiausią lyginamąjį svorį visų Lietuvos verslo subjektų sumokėtų mokesčių sumoje, aptariama jų tarifų pokyčių galima įtaka veiklos rezultatams. Empirinėje darbo dalyje atlikta 2005-2009 m. Lietuvos verslo subjektų sumokėtų mokesčių dinaminė ir struktūrinė analizė, nagrinėjama mokesčių naštos rodiklio dinamika. Tiriama, kaip daugiausiai 2009 metais kitę mokestinių dydžių tarifai (pelno mokesčio, PVM, kuro akcizas) įtakojo šių mokesčių mokėjimą. Pritaikius daugialypę regresinę analizę analizuojama pelno mokesčio tarifo pokyčių įtaka įmonių materialinėms investicijoms. Nagrinėjama, ar PVM tarifo pokyčiai turėjo įtakos Lietuvos įmonių pardavimo pajamų pokyčiams, aiškinamasi ar dėl mokesčių tarifų pokyčių pakitusi bendra mokesčių našta galėjo lemti išaugusį pradėtų bankroto procesų skaičių Lietuvoje. / In the final bachelor’s work theoretical elements of taxes are analyzed, as well as burden of taxes and its effect to business. Three main taxes (VAT, income tax, excises) which have the largest specific influence among all paid taxes of Lithuania business subjects according to information of Lithuania department of statistics are analyzed in details in theoretical aspect. It is discussed the possible influence of their rate changes. In the empirical part of this work dynamic and structural analysis of Lithuania business subjects paid taxes in 2005-2009 is done, dynamic of rate tax burden is analyzed. It is discussed how the tax rates which had the biggest changes (income tax, VAT) in 2009 influenced payment of these taxes. Adapting multiple regression analysis influence of tax rate changes to material investments of companies is analyzed. Also it is analyzed whether changes of VAT rate had influence on Lithuania companies’ income of market changes or not, it is explored whether altered total tax burden could determine increased number of started bankrupt processes in Lithuania or not.