The Fair Tax Act, Part XLV
The next special rules section is for gaming activities & gambling:
`SEC. 702. GAMING ACTIVITIES.
`(a) Registration- Any person selling 1 or more chances is a gaming sponsor and shall register, in a form prescribed by the Secretary, with the sales tax administering authority as a gaming sponsor.
`(b) Chance Defined- For purposes of this section, the term `chance’ means a lottery ticket, a raffle ticket, chips, other tokens, a bet or bets placed, a wager or wagers placed, or any similar device where the purchase of the right gives rise to an obligation by the gaming sponsor to pay upon the occurrence of–
`(1) a random or unpredictable event; or
`(2) an event over which neither the gaming sponsor nor the person purchasing the chance has control over the outcome.
`(c) Chances Not Taxable Property or Service- Notwithstanding any other provision in this subtitle, a chance is not taxable property or services for purposes of section 101.
`(d) Tax on Gaming Services Imposed- A 23-percent tax is hereby imposed on the taxable gaming services of a gaming sponsor. This tax shall be paid and remitted by the gaming sponsor. The tax shall be remitted by the 15th day of each month with respect to taxable gaming services during the previous calendar month.
`(e) Taxable Gaming Services Defined- For purposes of this section, the term `taxable gaming services’ means–
`(1) gross receipts of the gaming sponsor from the sale of chances, minus
`(2) the sum of–
`(A) total gaming payoffs to chance purchasers (or their designees); and
`(B) gaming specific taxes (other than the tax imposed by this section) imposed by the Federal, State, or local government.
So it appears that casinos and video poker operators, et al will have their gaming profits taxed at the straight 23% rate. This might actually be a better deal than under the income tax system, but it is not complete tax freedom as other kinds of businesses would have under the FairTax. The justification is that gaming chances do not constitute a good or a service, and thus the bill taxes profits instead.
I think we just lost the Native American vote! I’m still trying to understand the income tax situation for casino’s operated by the various tribes, but it looks offhand like this 23% tax is a loser. Stay tuned!
Well we can’t tax the Native Americans on reservation land anyway, can we? I don’t think the Fair Tax OR income tax applies. (Reserving the right to be completely mistaken here).
However, the taxable casinos I think are better off under the FairTax than the current system (corporate rates at 35-39% on profits if I am not mistaken). Also they do get the employer’s share of SS/Medicare taxes back too, and casinos are very heavy on labor.
Here is a link detailing the corporate tax rate.