Congressman Jim McDermott (D-WA) has introduced an updated version of HR 2268 dubbed the Internet Gambling Regulation and Tax Enforcement Act. HR 2268 was introduced last May and the new bill is numbered HR 4976.
The measure currently has three co-sponsors and, according to information released by McDermott’s office, could funnel as much as $72 billion over a ten-year period into the struggling American economy. The updated version already has three co-sponsors: Earl Blumenauer (D-OR), Barney Frank (D-MA), and John Larson (D-CT). McDermott’s measure was officially introduced on Thursday and referred to the House Committee on Ways and Means and the Committee on Education and Labor. Larson is the Chairman of the House Democratic Caucus.
The new bill, like its predecessor, imposes a federal licensing fee of 2% of deposits. This tax cannot be “deducted from the amounts available as deposits to the person placing a bet.” According to McDermott’s officials and previous estimates from the Joint Committee on Taxation (JCT), up to $42 billion could be reaped from the 2% deposit tax along with corresponding corporate, wager, and income taxes. The figure is over a ten-year period.
HR 4976 introduces a 6% tax on deposits benefiting state and tribal governments, estimated to bring in $30 billion over ten years. Information released by McDermott’s office explains the benefits to states and tribal governments of taxing the burgeoning internet gambling industry: “At this level of taxation, internet gambling will still be quite profitable and states and tribes will have an easy way to participate in the taxing of internet gambling.” As it stands now, land-based gambling is also taxed at the state level, providing a windfall of cash each month to states like Nevada, New Jersey, and Indiana.
McDermott’s new internet gambling venture adds two more twists that HR 2268 lacked. The first ships 25% of funds raised through HR 4976 to the Transitional Assistance Trust Fund, which provides educational opportunities and job training for those currently or formerly in foster care. The amount allocated to each state would depend on its population. In addition, 0.5% of funds raised through HR 4976 would be given to the American Heritage Block Grant Fund, which benefits historic preservation and the arts.
Among those who broke word of the legislation was the Safe and Secure Internet Gambling Initiative (SSIGI). Organization spokesperson Michael Waxman commented in a press release distributed by the SSIGI on Thursday, “This legislation is a win-win for federal and state leaders, providing an opportunity to regulate a currently offshore and underground industry, protect consumers, and put to good use tens of billions in otherwise lost revenue.” The SSIGI noted that all but six states have budget shortfalls in the upcoming fiscal year.
HR 2268 had five co-sponsors, including Blumenauer and Frank. The latter is the author of HR 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. The bill outlines a complete licensing and regulatory framework for internet gambling outfits to solicit customers from the United States. HR 2267 is up to 66 co-sponsors on both sides of the aisle and currently awaits markup in the House Financial Services Committee, of which Frank is the Chair.
Also popping up in recent weeks was the S 3018, the Bipartisan Tax Fairness and Simplification Act. The measure, brought to life in the U.S. Senate by Ron Wyden (D-OR) and Judd Gregg (R-NH), imposes a variety of changes to the country’s tax code. In an effort perhaps to defray a portion of the bill’s cost, S 3018 includes a provision to license, regulate, and tax the internet gambling industry. Wyden had also tapped internet gambling to pay for the recently-approved health care overhaul, but withdrew a proposed amendment to a bill last September.
Stay tuned to Poker News Daily for the latest developments from Capitol Hill.
