The Eagles song Hotel California remains a classic rock hit. During my recent vacation I walked through a Hotel California—the California Hotel and Casino in downtown Las Vegas.

The California has a Hawaiian theme, and the hotel is popular with tourists from the island state. But that might not last; Governor Lingle signed legislation making gambling losses not deductible on Hawaiians’ state tax returns.

The Hawaii Department of Revenue estimated the tax (I’ll call it by its real name rather than an elimination of an itemized deduction) could bring in $300,000 to the Aloha State. It won’t. As I’ve said before, taxes never bring in what they’re projected to because individuals modify their behavior to avoid the tax. There will be a lot fewer Hawaii tax returns filed that show gambling winnings for 2009.

And yes, the law is retroactive to January 1st. State Representative Pono Chong sponsored the legislation; he told the Honolulu Advertiser that the tax is “…a way to bring in additional revenue at a time when the state is ‘undergoing a significant and possibly protracted economic downturn in tandem with the national and global economic and financial crises.’” I guess the idea of cutting state spending is anathema to Hawaiian legislators.

For the California Hotel they may have to change their theme or attract a different customer base. Otherwise the lyrics that the Eagles wrote may become true:

Welcome to the Hotel California
Such a lovely place
Such a lovely face
Plenty of room at the hotel California
Any time of year, you can find it here