Thursday, April 23, 1998 | 10:42 a.m.
GAMBLERS can relax -- for now.
Sen. Daniel Coats, R-Ind., is foregoing his effort to eliminate a provision that allows gamblers to deduct their losses on taxes. Coats wrapped his plan to eliminate the deduction into one that would earmark the savings for education. He wanted to repeal the gambling loss deduction and take the $1.1 billion in savings over four years to increase the tax break for people who make donations to private schools providing scholarships for low-income children.
The Indiana Republican's disdain for gaming couldn't be hidden, though, as he sought to cast the debate in moral terms. "This amendment gives senators a clear choice between helping underprivileged kids or continuing to line the pockets of gamblers," Coats said. Despite his best efforts, there didn't seem to be too many senators willing to risk sound tax policy on this piece of bad legislation.
As SUN correspondent Paul Kane reported, gamblers can deduct their losses from gambling winnings, much in the way capital gains are taxed. For example, someone who wins $5,000 in a trip to a casino must report that income to the Internal Revenue Service, but that same individual could also report losses from other casino trips to defray net gambling income.
While Coats lost this battle, he doesn't see the war as being over. A spokesman for Coats, Tim Goeglien, said the senator still remains committed to eliminating the gambling-loss deduction. Nevada's congressional delegation, which opposed the measure, indicated it wouldn't be surprised if Coats' plan resurfaces later this year.
For the U.S. tax code to work and earn respect, it requires fairness. Earmarking taxes for specific purposes usually isn't wise public policy. And in this case, earmarking taxes that have no relation to the ultimate use makes no sense at all. Coats' brazen grab was seen for what it really was -- an attempt to inject his sense of morality into the tax code.
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