Senators push for bill to eliminate tax deduction for losses

Thursday, June 26, 1997 | 11:49 a.m.

Sen. Phil Gramm, R-Texas, wants to kill the gambling deduction, saying the $1.5 billion in revenue could be used to provide tax breaks for parents to send their children to private schools.

Wayne Mehl, a Washington, D.C. lobbyist for the Nevada Resort Association, said the proposal is the most ominous for the gaming industry since the White House proposed a 4 percent tax on gaming revenues in 1994. That proposal failed to make it to Congress.

"Congress is trying to come up with a tax bill that will fit last month's balanced budget agreement, and the gaming industry is a tempting target for members who want to protect their vested interests," Mehl said.

Sen. Richard Bryan, D-Nev., who works with Gramm on the Senate Finance Committee, said he persuaded Gramm to back off the plan at one point. But he said he isn't sure Gramm will pass up an opportunity to offer the proposal this week on the Senate floor.

"The danger for the industry is that this is now on the radar screen," Bryan said. "Anybody who wants to make a change in the tax code to provide an offset will look at this. It never goes away."

Gramm may try to attach his amendment to a tax bill the Senate is debating this week.

At the same time, Sen. Jack Reed, D-R.I., announced similar plans to try and kill the tax deduction. Reed characterized the deduction as a loophole benefiting "wealthy taxpayers and high rollers."

"Given the efforts to tighten the budgetary belt, continuing to subsidize gambling is unsound policy," Reed said.

The proposal comes on the heels of last week's first meeting of a new federal gaming commission, where speakers blasted legalized gambling.