Illinois Casino Tax Ruled Unconsitutional
Last year, Illinois added a new tax to help the horse racing industry. The tax required Chicago-area casinos that make over $200 million a year to remit 3% of their gross revenues to a fund benefiting Illinois' nine horse racing tracks.
However, the law exempted five southern Illinois casinos, and Will County Judge Bobbi Petrungaro found that the law didn't pass muster. For the law to have been legal, all Illinois casinos would have had to pay the tax.
The lawsuit was brought by the four Chicago area riverboat casinos. The Illinois Attorney General has not decided whether to appeal the ruling.
New York Loves Gamblers
New York is known as a high-tax state. Those who live in New York City or Yonkers must pay state and city income tax. That's bad. The amateur gambler is in for a surprise, too. While New York allows itemized deductions for gambling losses, New York's tax rules give a very rude surprise for the gambler.
Let's take a typical case. John Smith makes $90,000 working in New York City. He also gambles, and nets $50,000. As I've written before, the amateur gambler cannot net his wins and losses. Wins are other income (line 21) while losses are an itemized deduction that is not subject to the 2% AGI restriction on miscellaneous itemized deductions.
Joe won $500,000 and lost $450,000. Those kinds of totals aren't atypical for the successful amateur. Joe discovers that when he substitutes his true totals for his net number, his federal tax has increased by $2600. He's shocked to find that his state tax jumps by $27,000!
If your Adjusted Gross Income (AGI) is over $500,000, you lose 50% of your itemized deductions on your New York tax return. You keep all of your itemized deductions when your AGI is $100,000 or less. There's a sliding scale between $100,000 and $500,000.
So New York joins my list of states for gamblers to avoid. For the record, here's the complete list:
Connecticut
Illinois
Indiana
Massachusetts
Michigan
Minnesota (because of its AMT)
Mississippi (Only MS gambling deductions are allowed)
New York
Ohio
West Virginia
Wisconsin
So New York may be the city that never sleeps, but New Jersey never looked so good for the amateur gambler.
