BARBWIRE

The Zero Sum Game

Does the gambling industry really support
an increase in the gross gaming tax?
1-20-2003 Web Extra
Updated 5-11-2008

The following came from a southern Nevada journalist in response to the 19 January 2003 column: "Andy, the media down here in Las Vegas (or at least the Sun) keeps reporting that the gamers have agreed to raise the gaming tax rate from 6.25 to 6.50. Is that your understanding? Might they be confusing this with the gross receipts tax? Casinos always play a shell game, don't they?"

NevadaLabor.com Research NevadaLabor.com Exclusive State of Nevada study blames chronic fiscal problems on wholesale creation of low-wage casino jobs. More corporate welfare horror stories: NevadaLabor.com White Paper on Nevada's unfair and regressive tax structure. 1-20-2003 Web Extra The Silence of the Sacred Cows Sparks Tribune 1-19-2003 Gambling industry offers only token taxes and cosmetic participation 1-20-2003 Web Extra State of the State: Next to Nothing Las Vegas CityLife 1-30-2003 Humongous property tax hike glossed over by Gov. Dudley Do-Right Sparks Tribune 1-26-2003 The need for zero-based taxing Sparks Tribune 12-13-98 Logrolling, air raids and dirty deeds done dirt cheap Sparks Tribune 2-2-2003 Legislative Opening Day Web Special: Dudley Do-Right, Joe Neal, living room elephants & chopped liver, 2-3-2003 Web Extra, reprinted by the Las Vegas Review-Journal on Sunday, 2-7-2003

In my Jan. 19 column, I noted that neither of the two sides in the tax debate support an increase in the gross gaming tax. I should have noted that the gambling industry supports a token raise, but it is so small that it amounts to cosmetics and PR spin.

The industry's support of an increase is the equivalent of George W. Bush and his compassionate but conservative statements. As Doonesbury so aptly put it, compassionate means "I care" and conservative means "you're own your own."( I deplore that Trent Lott got caught, but I'm resubmitting the nominations of neo-fascist judges.)

Casino mogul Mike Sloan is pulling a great little con on taxes. First, the Guinn/Hobbs commission, on which he sits, shills for a plan identical with what the gambling industry wants. That plan says any outfit subject to the .25% gross proceeds tax (I call it RUST — Regressive Universal Sales Tax) can deduct the BAT (Business Activity Tax or per-employee tax).

Sloan has disclaimed any desire by the casinos for that deduction, saying that the committee (upon which he sits) came up with that. In Washington, DC, that's called plausible deniability.

Mr. Sloan has said so in defending himself against allegations that gambling will not pay spit. Sloan always falls back on the fact that they have "stepped up to the plate" by allowing a .25% increase in the gross gaming tax. (I hate it when these pirates use that term. They said they stepped up to the plate by allowing the room tax to be increased to pay for the Reno railroad trench and the southern Nevada water pipeline. As you know, sales and room taxes are pass-throughs. Businesses not only make a fee for collecting the sales tax, but can float on the cash and earn interest.)

Further, all state taxes are fully deductible items on federal income tax returns, further reducing the real-dollar liability.

The real-world numbers strip away the cosmetics. The gambling industry grosses about $9 billion in casino revenue and another $9 billion in non-gambling income. A .25% tax on each will yield about $44 million a year, a drop in the bucket if Gov. Dudley Do-Right needs $700 million just to break even in the next biennium.

The non-gambling business opposition has allowed the debate to be focused within narrow parameters, which is why I wrote that column. A good example is the recent set-to between Sloan and Ray Bacon of the Nevada Manufacturers Assn. Bacon pegged gambling's net liability at $6 million. Sloan pounced and said it's a whopping $39.5 million. Big Deal. (See Ed Vogel's Las Vegas Review-Journal story.)

Actually, if the BAT is subtracted from the RUST (new gross gaming and gross proceeds taxes less the business license tax), gambling's net liability falls to about $23 million annually — all completely deductible on a federal tax return, so the net new tax on the gambling industry will approach zero.

Mr. Bacon's figure thus may well be closer to actual practice than Mr. Sloan's.

As one college prof said a few days ago, the easy and likely way out for the ledge will be the same-old same-old — a patchwork of hikes in taxes and fees to tide us over for two years and maybe less.

I will rejoice the day that anyone notes the hard evidence on the record that low-wage gambling industry jobs are the source of our troubles, per the seminal Nevada Commission on Economic Development study.

Gambling is the source of the problem and must be the major part of the solution. They don't merit a comp on this one.

Be well. Raise hell.

AB

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Copyright © 2003, 2008 Andrew Barbano

Andrew Barbano is a 34-year Nevadan, a member Communications Workers of America Local 9413 and editor of NevadaLabor.com and JoeNeal.org. He hosts Deciding Factors on several Nevada television stations. Barbwire by Barbano has originated in the Daily Sparks (Nev.)Tribune since 1988.

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