EDITORIAL: Congress should pass Titus’s bill on gambling deductions

President Donald Trump’s “big beautiful bill” contains many useful provisions, including the extension of his 2017 landmark tax cut legislation. That alone averted a $4.5 trillion tax hike on the American people. But one last-minute addition to the measure has earned the wrath of Nevada’s congressional delegation — and rightfully so.

In the wee hours of Senate negotiations, Sen. Mike Crapo, an Idaho Republican, added a provision to the bill that would limit the ability of gamblers to deduct their losses. Sen. Crapo has yet to offer an explanation for the move, but the change would raise $1.1 billion over eight years, according to the Joint Committee on Taxation. The language was included in the final version of the legislation that passed the House and was signed by the president on Friday.

Under current tax law, gamblers may write off up to 100 percent of losses against any winnings as long as they itemize deductions on Schedule A. The break is not available to those who take the standard deduction, the vast majority of filers. Under Sen. Crapo’s provision, gamblers who itemize their returns may now deduct just 90 percent of their losses.

One professional gambler told the website Front Office Sports that he would “basically just have to stop” thanks to the new rules. “If I win $100 million and lose $99 million,” he said, “that would be a great year, to have $1 million in profit. But with this bill, I would have to pay taxes on about $10 million in ‘gains’, which would turn my year into a $2 million loss.”

Rep. Dina Titus, a Nevada Democrat, argues convincingly that the reform will encourage more gamblers to go underground to avoid punitive taxes, potentially harming the Silver State’s primary revenue source. The government, she said, should instead “be encouraging players to properly report their winnings and wager using legal operators.” Rep. Titus on Monday introduced the Fair Accounting for Income Realized from Betting Earnings Taxation Act in the House. Rep. Ro Khanna, D-Calif., is a co-sponsor.

The problem with Sen. Crapo’s amendment extends beyond a parochial concern for Nevada’s largest industry and its customers. Not only is it a massive tax hike — the opposite of the bill’s intentions — it’s patently unfair. Nobody should be forced to pay federal income taxes on money they never earned. Yet the new regulation would result in some gamblers writing checks to the IRS even when they had net losses for the year.

The Crapo amendment is set to go into effect next year, but it deserves a swift death. Congress should pass Rep. Titus’ legislation as soon as possible.