[Congressional Record Volume 143, Number 92 (Thursday, June 26, 1997)]
[Senate]
[Pages S6504-S6507]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mr. Chafee, Mr. Coats, and Mr. Inhofe):
  S. 972. A bill to amend the Internal Revenue Code of 1986 to prohibit 
any deduction for gambling losses; to the Committee on Finance.


                 REPEAL THE GAMBLING LOSS TAX DEDUCTION

  Mr. REED. Mr. President, this week the Senate has considered 
legislation to fundamentally change Medicare and other programs that 
are vital to millions of Americans. I realize that we must make 
difficult choices about these valuable initiatives as we move toward a 
balanced budget. However, as we seek to invest in our nation's future, 
we must also confront loopholes and subsidies that waste our limited 
resources.
  The tax code contains many such loopholes, which fail to reflect our 
nation's true priorities. For example, the United States is subsidizing 
thousands of professional gamblers by allowing tax deductions for 
gambling losses to the extent of gambling winnings. The Joint Tax 
Committee reports that this deduction costs taxpayers $1.43 billion 
over five years.
  The gambling loss tax deduction is an anomaly for individuals who 
frequent an industry that sells itself as providing entertainment. In 
general, the tax code does not allow deductions for discretionary 
spending on entertainment, and I believe that it is more than 
reasonable to hold gambling expenditures to this same standard. 
Repealing the gambling loss tax deduction merely increases the cost of 
one entertainment option, a factor that gamblers can consider in 
determining how to spend their discretionary income. Furthermore, while 
most business deductions are for investments--

[[Page S6507]]

and even losses--that could have created needed job opportunities for 
our nation's citizens, this is not the case for the losses claimed by 
professional gamblers on their personal income taxes.
  Perhaps more importantly, the gambling loss tax deduction primarily 
benefits professional gamblers and wealthy individuals who spend large 
sums on gambling. In 1994 alone, $2.78 billion in gambling losses was 
deducted on some 427,000 tax returns. Individuals with adjusted gross 
incomes of at least $75,000 claimed nearly 55% of these gambling 
losses, and people with adjusted gross incomes of at least $100,000 
claimed an astounding 40% of these deductions.
  When Congress is cutting essential programs to balance the budget, it 
is simply unsound policy to subsidize gamblers. I urge my colleagues to 
join me, Senator Chafee, Senator Coats, and Senator Inhofe in 
supporting legislation to repeal the gambling loss tax deduction, and 
in taking a step to ensure that we balance the budget in a way that 
reflects our nation's priorities and invests in our nation's future.
  Mr. President, I ask unanimous consent that a copy of this 
legislation to repeal the gambling loss tax deduction be included in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 972

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PROHIBITION ON ANY DEDUCTION FOR GAMBLING LOSSES.

       (A) In General.--Section 165(d) of the Internal Revenue 
     Code of 1986 (relating to wagering losses) is amended to read 
     as follows:
       ``(d) No Deduction for Wagering Losses.--No deduction shall 
     be allowed for losses from wagering transactions.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 21, 
     1997.
                                 ______