Should gambling be taxed?

[Reef]

the results will be skewed if you're looking for what the general population believes. This is pretty much a gamblers' forum.

[kdog]

I can't believe 32 people from here voted yes.

[TheMetetron]

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I can't believe 32 people from here voted yes.

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Yeah, that is kind of weird.

[spamuell]

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I can't believe 32 people from here voted yes.

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Yeah, that is kind of weird.

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Why? It's not like clicking yes suddenly takes away money from you, it's just what you believe should ideally be the case.

[LinusKS]

TStone, what are you angry about?

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MicroBob, the thing about a national sales tax is that you can have a simpler tax system without a sales tax, and you can have a sales tax without simplifying the system.

Anyway, mostly the proponents of sales taxes have an ulterior agenda - which is shifting the tax burden from the rich to the poor. If that wasn't the case, they'd also favor simplifying the current system, by - for example - eliminating itemized deductions. But they don't favor it, because itemization mostly benefits the wealthy.

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"I mean really it's ridiculous how much money one can make playing poker online and not pay any tax at all while others work much harder for much less money and they're the ones who have to give a large amount of this to the government."

I think that's the main reason gambling will always be taxed in the US - why should workers be taxed when gamblers aren't?

The thing is, if all winners were taxed only on their winnings, and all losers got to deduct the amount of their losses, the amount the losers deducted would exactly equal the amount the winners paid. The net effect would be zero.

The government would collect nothing, except vast amounts of paperwork.

That's why workers (and investors) should be taxed, because they're producing something, not just transferring money back and forth.

[newhizzle]

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The thing is, if all winners were taxed only on their winnings, and all losers got to deduct the amount of their losses, the amount the losers deducted would exactly equal the amount the winners paid. The net effect would be zero.



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actually wouldnt the government lose money because of rake and tourney buy in fees?

[Zetack]

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The thing is, if all winners were taxed only on their winnings, and all losers got to deduct the amount of their losses, the amount the losers deducted would exactly equal the amount the winners paid. The net effect would be zero.

The government would collect nothing, except vast amounts of paperwork.



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That's a very interesting point and well taken, but as always I like to nit-pick.

Winners would have extra income which would tend to drive them to higher tax brackets. Losers would have less income which would tend to drive them to lower tax brackets. So theoretically, not accounting for the effect of rake, you would expect the goverment to have some net tax.

Now if we had a flat tax your theory would be correct (again, disregarding the effect of rake.

Also, to nit pick further, did you limit the statement to poker? because if you include wins and losses in house-edge games the losses would way out pace the gains and the government would lose tax revenue from gambling.

--Zetack

[LinusKS]

Yes, gamblers are net losers when you take the juice into account. So if all gamblers filed, and the IRS let gamblers deduct losses as well as claim winnings, the government would be a net loser - it would lose more than it collected.

Zetack, the winners get pushed up into higher tax brackets, but the losers get pushed down, so it ought to even out.

The house isn't really gambling - they're just running a business. If the IRS taxed casinos, but let gamblers alone, they'd come out ahead.

[Zetack]

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Zetack, the winners get pushed up into higher tax brackets, but the losers get pushed down, so it ought to even out.



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No, I don't think so. Again, ignoring the rake you were assuming a zero sum game where money lost by one person was money won by some body else. So lets just through out some examples...

You have two people making 100k in a hypothetical where for ease of math they paid a flat 30 percent tax rate. Each of them pays 30k in taxes for a total of 60k between the two of them.

Ok, now figure guy A makes 50k gambling and it pushes him into a 35 percent tax bracket. Guy B loses 50k gambling which puts him in a 25 percent tax bracket.

So guy A pays 35 percent on his winnings or 17.5k for a total of 47.5k in taxes.

Guy B now only has 5Ok in earnings after deducting his losses. He pays 25 percent or 12.5k.

Together they now pay 50k in taxes instead of 60k.

Obviously, in the real world with millions of gamblers you would start with a wide variety of tax brackets, but the tendency would be to drive down tax receipts rather than just being netted out.

Or so it seems to me without doing any real analysis.





--Zetack

[grimel]

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Anyway, mostly the proponents of sales taxes have an ulterior agenda - which is shifting the tax burden from the rich to the poor. If that wasn't the case, they'd also favor simplifying the current system, by - for example - eliminating itemized deductions. But they don't favor it, because itemization mostly benefits the wealthy.

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You are 100% CORRECT! I'd like to see the poor pay SOME of the tax burden and see my portion lowered. I'd like to see the wealthy's portion lowered even more. It is beyond unfair and insane that the top 5% of income earners shoulders 50% of the tax burden. It is just as insane that the top 50% shoulder (essentially) 100% of the tax burden.

FYI, itemization benefits mostly home owners still paying off their home loan (and to a lesser degree the self employeed).