No tax breaks for you!
That’s what the House of Representatives said Wednesday to Gulf Coast casinos devastated by Hurricane Katrina and Hurricane Rita. Under a relief bill by U.S. Rep. Frank Wolf, R-Va., that passed by a whopping 415-4, a new Gulf Opportunity Zone will provide tax breaks and other relief for businesses.
But not for casinos, golf courses, massage parlors, hot tub parlors, suntan businesses, liquor stores or racetracks.
Now, as you can imagine, this is about as popular with the gambling industry as a reasonable tax on winnings. Or so we guess from the fulminations streaming from the front page of today’s Review-Journal.
“The commercial casino industry should be treated like any other legal business working to rebuild along the hurricane-ravaged Gulf Coast, especially since our industry is the economic engine of the region,” said Frank Fahrenkopf, president and CEO of the American Gaming Association.
“We don’t want special benefits; we just want to be treated like any other business,” added Jan Jones, senior vice president of Harrah’s Entertainment.
“There is no reason why a business down the street should benefit and we can’t,” added Rob Stillwell, spokesman for Boyd Gaming.
And, in their own way, Fahrenkopf, Jones and Stillwell are right. Gaming is a legal, licensed and regulated business, it supplies thousands of jobs and millions of dollars to local and state governments and it will be a vital part of restoring tourism to the area. There’s no doubt that Wolf’s opposition to gambling had more to do with this bill than sound public policy.
But let’s just consider the other side for a moment, shall we?
Wolf says it’s the gambling industry’s much-touted success that led him to deny them tax breaks. If they’re so profitable, it’s highly unlikely Boyd, Harrah’s or MGM Mirage will simply walk away rather than rebuild. And once they rebuild, they’ll be back providing jobs, taxes and the other ancillary benefits of a casino. Whether you believe that’s Wolf’s true motive or not (and we don’t), you can’t deny that there’s something to that.
What Wolf didn’t say, but what others might, is that gambling isn’t as legitimate or necessary a business to rebuilding as, say, Home Depots, grocery stores, private hospitals and other medical facilities, construction and contractors, etc. If we are to prioritize relief, there’s something to the notion that the relief should go to companies that are going to help in the actual rebuilding, rather than entertainment options like casinos or golf courses.
(And yes, we do realize that there are thousands of casino employees who, without jobs, won’t be able to buy things at Home Depots and grocery stores.)
Finally, there’s Fahrenkopf’s reference to the gambling industry being the economic engine of the region, and the philosophy that undergirds it. Just because casinos pay millions in taxes does not mean that the casinos own the state, although it often works out that way. Good public policy and independent lawmakers should run the state, and run it for the best interests of the people. When Fahrenkopf starts throwing gambling weight (and money) around, he’s saying just the opposite: He who has the gold makes the rules. And while that might work within the industry, it shouldn’t ever be allowed to be the philosophy of governing.
Normally, we at Various Things & Stuff oppose any kind of corporate welfare. Big companies don’t generally need the relief as much as poor people do, and we’re outraged when we see oil companies get tax breaks when they post record billion-dollar profits in a single quarter, while Republicans cut student aid, farm subsidies and Medicare.
But this situation is somewhat different. A natural disaster of such epic proportions does call for government help, first in rescue and medical assistance and then in rebuilding infrastructure, homes and businesses. While we think it’s entirely appropriate and legal to set guidelines as to who gets relief, in this case, we think Wolf is shortsighted to exclude casinos.
They are legal, licensed businesses. They do provide jobs, and pay taxes. (In fact, they pay a greater share of taxes than they do here in Nevada.) And while they aren’t as essential to a community as a hospital, a Home Depot or a grocery store, they are legitimate businesses. And that means, gambling phobias aside, casinos should also be eligible for benefits in the Gulf Coast region, just like real estate offices, dry cleaners, restaurants, auto parts stores, hardware stores or a host of other businesses that are going to need a hand to rebuild.
Fortunately for them, the Senate’s version of the relief bill does have casinos included on the list of businesses eligible for relief. (Hmmm. Perhaps somebody should ask Senate Minority Leader Harry Reid how that happened.) We’re betting the final bill will allow casinos to take advantage of the tax breaks, too.
Oh, by the way, the four dissenters on Wolf’s bill? You can probably guess, but they were U.S. Reps. Shelley Berkley, Jim Gibbons, Jon Porter and Frank LoBiondo, R-N.J., the congressman from Atlantic City.