In breaking news from Capitol Hill, Senators Ron Wyden (D-OR) and Judd Gregg (R-NH) have introduced S 3018, the Bipartisan Tax Fairness and Simplification Act. The measure seeks to simplify U.S. tax code and, as its name implies, has one Democrat and one Republican as its main sponsors. Included in the provisions of the bill is Subtitle C, which taxes licensed internet gambling companies and outlines a comprehensive framework for regulating the industry in the United States.

Wyden commented in a press release that appeared on his official Senate website, “By simplifying the tax code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead. Businesses of all sizes will be in a better position to compete and grow jobs. Working families will keep more of their hard earned dollars and everyone will spend a lot less time filling out tax forms.” The bill imposes a flat corporate tax rate of 24% to allow U.S. businesses to be able to compete with international entities.
In addition, S 3018 eliminates the Alternative Minimum Tax and chops the number of individual tax brackets from six to three. For businesses, equipment and inventory costs can be expensed to a single fiscal year. According to text found on Gregg’s website, business tax rates would drop by about 30% as a result of the reform. Internet gambling may be included in order to fund other parts of the bill.

The proponents of the legislation explain, “Wyden-Gregg streamlines the tax code by eliminating a number of specialized tax breaks that favor one business sector or group of individuals over another. Removing these breaks for specific groups will not only make the tax code fairer and raise funds to extend tax relief on a more equitable basis, these simplifications will make it harder for businesses and individuals to avoid paying their taxes.” Nearly 10,000 tax deductions and exemptions currently exist. Individuals must file income taxes by April 15th of every year.

S 3018 borrows language from two existing internet gambling bills. The first, Congressman Barney Frank’s (D-MA, pictured at left) Internet Gambling Regulation, Consumer Protection, and Enforcement Act, establishes a full licensing and regulatory framework for the internet gambling industry in the United States. The bill, which was introduced in May, is up to 65 co-sponsors on both sides of the aisle, mirroring the bipartisan nature of Wyden and Gregg’s bill. However, it has not made it out of the House Financial Services Committee, of which Frank is the Chair.

The bill also takes inspiration from HR 2268, Congressman Jim McDermott’s (D-WA, pictured at right) Internet Gambling Regulation and Tax Enforcement Act. The bill, which was introduced on the same day last May as HR 2267, taxes licensed internet gambling operators at a rate of 2% of deposits. S 3018 uses the same tax rate and employs some of the vetting language of Frank’s measure. HR 2268 is up to five co-sponsors.

This isn’t Wyden’s first attempt at legalizing internet gambling. Back in September, he withdrew a proposal calling for revenue derived from internet gambling to be applied towards health care reform, which could have come with a $1 trillion price tag. On Wyden’s interest in the issue, Poker Players Alliance (PPA) Executive Director John Pappas told PocketFives.com, “We've met with his staff a number of times and I’m a little disappointed that he's not yet a cosponsor of the Menendez bill. However, we're thankful that he's keeping the ball moving.”

Pappas alludes to Senator Robert Menendez (D-NJ, pictured at left), who introduced S 1597, the Internet Poker and Game of Skill Regulation, Consumer Protection, and Enforcement Act. The bill, which singles out online poker and other games of skill as permissible under U.S. law, was introduced in August and referred to the Senate Committee on Finance. As of late, no action has been taken on the bill. Meanwhile, Menendez’s home state may soon see the introduction of licensed intrastate internet gambling.

Pappas admitted that the PPA was still trying to wrap its arms around the tax implications of S 3018 before the organization threw its full 1.2 million-member weight behind it. He explained, “A rising tide lifts all boats. The more bills that are out there, the better it'll be for us. The idea of using internet gambling as a pay-for is very clever. Ultimately, this is where our legislation may be headed.”

Read the full text of S 3018. Stay tuned to PocketFives.com for the latest poker legislation news.