I was told by a Congressional staffer that reason #2 (the reconciliation bill needed $1.1 billion more of revenue) was why it was added. Whether that's truthful or not, I have no idea. You're certainly a lot closer to Congress (literally and figuratively) than I am.
I do believe that this will be repealed. However, I have no idea **when** that will happen; bad tax legislation (e.g. amortization of R&D expenses) tends to stay in the law for years. Given that no stakeholder likes this, and this will **eventually** drastically hurt the new (mostly) sportsbetting companies, I put the chance of repeal within ten years at 99.99%. However, I believe the prediction market odds of about 25% by year-end are quite accurate.
Thanks for the intel, Russ. The good news about repeal is that there are always year-end vehicles moving through Congress that it could jump aboard, and---as you say--it feels like a policy orphan with few substantive supporters but plenty of angry stakeholders.
Excellent piece, and I appreciate the distinctions between “pro” and non-pro gamblers.
I’ll politely suggest that your sample tax calculations under the new 90% rule aren’t accurate. The 37% marginal rate doesn’t apply until a single taxpayer earns (for the pro, has a profit) over $626k, and $1.5 million for a married pro. And that high rate doesn’t apply to the first dollars of income that the pro earns - those are taxed at 10-35% - on the fair assumption that a successful pro doesn’t have a day job or other income.
But to make the point that the 90% rule taxes phantom income, you’re on solid ground.
Correct. The new version of the language was reported from committee after being generated for consideration in the committee as a “chairman’s mark,” and you do not get to see who added the specific language when a draft is developed that way.
I have another theory. This provision was reportedly put in by Senator Mike Crapo. Crapo is a practicing Mormon and was once a Mormon bishop. The LDS church has been vehemently opposed to gambling for decades and has actively lobbied against the legalization of lotteries and gambling expansion. Las Vegas is a particularly sore spot for the LDS church since it was LDS financiers that originally helped build up the Las Vegas strip. While this was ostensibly just a budgetary maneuver I wonder if it was also at least partially religiously motivated.
This would track with history since religious conservatives were behind UIGEA which killed the golden age of online poker back in the 2000s. A popular and growing industry was crushed for very little gain.
I was told by a Congressional staffer that reason #2 (the reconciliation bill needed $1.1 billion more of revenue) was why it was added. Whether that's truthful or not, I have no idea. You're certainly a lot closer to Congress (literally and figuratively) than I am.
I do believe that this will be repealed. However, I have no idea **when** that will happen; bad tax legislation (e.g. amortization of R&D expenses) tends to stay in the law for years. Given that no stakeholder likes this, and this will **eventually** drastically hurt the new (mostly) sportsbetting companies, I put the chance of repeal within ten years at 99.99%. However, I believe the prediction market odds of about 25% by year-end are quite accurate.
Thanks for the intel, Russ. The good news about repeal is that there are always year-end vehicles moving through Congress that it could jump aboard, and---as you say--it feels like a policy orphan with few substantive supporters but plenty of angry stakeholders.
But, like you say, these things often take time.
Excellent piece, and I appreciate the distinctions between “pro” and non-pro gamblers.
I’ll politely suggest that your sample tax calculations under the new 90% rule aren’t accurate. The 37% marginal rate doesn’t apply until a single taxpayer earns (for the pro, has a profit) over $626k, and $1.5 million for a married pro. And that high rate doesn’t apply to the first dollars of income that the pro earns - those are taxed at 10-35% - on the fair assumption that a successful pro doesn’t have a day job or other income.
But to make the point that the 90% rule taxes phantom income, you’re on solid ground.
How can anything get added to a bill without attribution to the staffer who inserted the particular provision?
Congress doesn’t have/utilize ‘Track Changes’?
Correct. The new version of the language was reported from committee after being generated for consideration in the committee as a “chairman’s mark,” and you do not get to see who added the specific language when a draft is developed that way.
Not that I’m cynical, I assume this process exists to hide the identity of the author/sponsor?
I wonder how often a legislator pushes something in private that they won’t fess up to publicly?
Extremely interesting, thank you.
I have another theory. This provision was reportedly put in by Senator Mike Crapo. Crapo is a practicing Mormon and was once a Mormon bishop. The LDS church has been vehemently opposed to gambling for decades and has actively lobbied against the legalization of lotteries and gambling expansion. Las Vegas is a particularly sore spot for the LDS church since it was LDS financiers that originally helped build up the Las Vegas strip. While this was ostensibly just a budgetary maneuver I wonder if it was also at least partially religiously motivated.
This would track with history since religious conservatives were behind UIGEA which killed the golden age of online poker back in the 2000s. A popular and growing industry was crushed for very little gain.
Re: the shutdown-
What do you think of 13 House Republicans in swing districts begging Johnson to negotiate on extending the ACA subsidies?
https://www.raw-story-2096750/4305088226205-house-republicans-new-plea-to-speaker-johnson-shows-writing-on-the-wall-for-gop-expert