Taxes targeted as
top industry threat

Feb 10, 2004 7:11 AM

Picking up from last month’s keynote address at Bellagio, American Gaming Association president and CEO Frank Fahrenkopf declared that 2004 would be "dedicated to combating higher tax rates to the industry."

"Lower tax rates bring long term economic benefits," Fahrenkopf said during a 75-minute panel discussion chaired by former Nevada Sen. Richard Bryan at the American Gaming Summit last week. "Gaming needs to be free of state politics."

Fahrenkopf had a major supporter in his corner at the session: Grover Norquist, president of Americans for Tax Reform, a watchdog group dedicated to reducing and controlling taxes.

"Republicans are committed to not raising taxes across the board through 2012," Norquist said. "A hundred years ago, that would not have been the case. In 1992, the GOP got the message. President Bush took it a step further with tax cuts."

Norquist warned that the danger of spiraling taxes remains strong across the country, particularly in states that are under Democratic control.

"In general, pushing taxes doesn’t do well," he said. "Southern states offer a prime example of this. Taxes were voted down by a 68-32 margin in Alabama. Georgia and South Carolina citizens voted down increased taxes. Still, as Frank told you, tax reform among states remains a great danger."

Norquist said that when taxes are cut, people will spend.

"The investor class has grown on the national level," he said. "Currently 60 percent of Americans own shares of stock, compared to 20 percent a year ago. The shift of taxes to businesses is less likely when people invest."

Norquist cited Texas’s plan to shuffle around taxes and how that could harm the gaming industry.

"Texas legislators wanted to reduce state property taxes so they advocated expanded gaming and allowing Sunday sales of liquor. We are against (those schemes)."

Fahrenkopf blasted states such as Illinois, which have threatened to tax gaming to extreme measures.

"We’re seeing tax rates against gaming in Illinois up to 70 percent and maybe higher," he said. "There is a tidal wave of change egged on by gaming opponents. State governments look at gaming as a ”˜big fat’ industry. I think Illinois is seeing in 20-20 hindsight that heavily taxing casinos does not work."

Fahrenkopf said that the top casinos areas in the nation (Las Vegas, Atlantic City, Mississippi Gulf Coast), have done the most business because their tax rates are the lowest.

"The casino revenues in Illinois went down 11 percent due to the 70 percent tax rate," he said. "As a result, people went to neighboring Missouri and its revenue rose 10 percent. The AGA is committed to countering voodoo economics."

Fahrenkopf admitted this would be a tough battle.

"Nevada raised its tax rate 0.5 percent from 6.25 to 6.7, which could have vast implications," he said.