Late last year, Congress extended the 2% cut in the payroll (FICA) tax for just two months. That extension expires in 18 days. Congress and the President appear to want it to be extended, but there’s a catch. The extension needs to be “revenue-neutral.” The two-month extension was linked to an increase in mortgage fees. Given the current housing crisis, I can’t imagine more mortgage fee increases. There’s no chance that a pure tax increase (or a millionaire’s tax increase, for that matter) can pass the Republican-controlled House. Will online poker come to the rescue?
Various sources in the gaming industry have reported over the last week that Senate Majority Leader Harry Reid (D-NV) and Senate Minority Whip Jon Kyl (R-AZ) have agreed to this. Senator Kyl has, in the past, been a fierce opponent of all things gambling-related, so this would be quite a turnaround for him. Senator Kyl admitted late last year that his stand on online poker had “softened.”
That said, it appears that the ten-month additional extension will pass Congress, and some source of revenue must be found in order to balance the books. Millions of Americans like poker, and if there were US-based sites a lot of tax revenues would be raised both from the sites themselves and from the players. This looks like a win-win to me. Still, until the measure is signed into law anything can happen including nothing at all.