Moments ago, Congress approved the most extensive changes to the tax code since 1986. While time will tell whether this broad overhaul ultimately leads to the type of economic growth proponents have promised, AGA is proud to have actively led an inclusive industry effort to ensure changes to the corporate tax code provide a net benefit to our members.
A reduction in the corporate tax rate from 35 percent to 21 percent requires many industries to concede significant, long-standing tax preferences and deductions. In this climate, the gaming industry emerged with several important wins. Specifically, the final agreement protects three priorities for our industry:
Largely preserves the ability for our customers who itemize to net their gambling income, despite a late effort in the Senate to eliminate this deduction;
Exempts most operators from limitations on interest deductibility and provides reasonable transition provisions for all businesses that pay interest on corporate debt; and
Helps to ensure favorable rules for research and development, which gaming suppliers rely on to constantly innovate.
A more detailed summary of the key provisions to the gaming industry is available HERE and a document discussing the impact of tax reform on casino patrons can be found HERE.
While there were wins, there are other areas where we will need to continue to engage to protect and promote the industry as “fixes” are considered in 2018 and beyond. High priority targets include:
- Lifting the Slot Tax Reporting Threshold: The $1,200 slot tax reporting threshold was set in the 1970s. The tax reform debate provided us an opportunity to introduce this topic to legislators and pave the way for adjusting the threshold in a favorable way for our members and customers. I encourage your continued engagement to help us make a compelling case for how a higher reporting threshold will help lower administrative costs and provide our customers an improved experience when they visit your facilities;
- Promulgating Regulations that Work for the Industry: Legislation of this size and scope will undoubtedly require significant details to be determined by the IRS and the Treasury Department. AGA will remain vigilant to ensure any rulemaking by executive agencies is consistent with industry practices and priorities; and
- Assessing and Addressing the Impact of Certain Changes: It may take some time to fully understand the effect some changes have on the industry and our customer base. For example, doubling the standard deduction for individuals will likely result in fewer taxpayers electing to itemize and net their gambling income/losses. AGA will need your continued input to know whether this has a measurable effect on customer behavior, and we stand ready to work with Congressional champions to help address any unintended consequences that threaten the health of the industry.
We recognize Congressional consideration of major changes to the federal tax code creates both opportunities and challenges for our multifaceted industry. AGA initiated an inclusive process to determine the most important aspects of tax reform to our membership and to develop a consensus list of priority issues. Through your partnership, we are pleased with the outcome and look forward to continuing on this success in 2018.
