Local politicians are taking a shot at slashing tax rates on charitable gambling activities-a push to halve exorbitantly high rates, they said, which hamstring nonprofit operations across the state and place local donations in the hands of St. Paul bigwigs.
In a joint statement, Tuesday, Feb. 12, state Sen. Carrie Ruud, R-Breezy Point, and state Rep. Dale Lueck, R-Aitkin, announced they co-introduced bills to reduce tax rates across the board for charitable gambling, impacting activities like pull-tabs, bingo and paddlewheels, among others.
It's one of six different proposals on the table being discussed in the Minnesota House of Representatives and the Minnesota Senate this session. In the Senate, Ruud's legislation was heard Feb. 7 and laid over for possible inclusion in the tax omnibus bill. In the House, Lueck's companion bill awaits a ruling by that body's taxes committee./p>
"I think that Rep. Lueck and I have the best bill," Ruud said during a phone interview Tuesday. "A lot of the other bills look at making this exemption and that exemption. We just think a straight up, forward cut the rate is the best approach."
What separates their bill from the others, Ruud said, is other bills have a finer, more exacting approach on what types of organizations, donations or spending are taxed and at what rate, while their bill entails a wholesale cut across the board.
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As they stand, the proposals stipulate a 50 percent rate reduction in taxes on charitable gambling activities-though Ruud noted the final law may turn out differently after negotiations, especially as it's likely to incorporate aspects of other legislation and may be included in a larger omnibus bill.
"It's a little aggressive," she said. "But, if you don't ask, you don't get."
In terms of losses-in which Ruud pointed to charitable groups in Aitkin, Crow Wing and nearby counties-she described them as "astronomical" and "outrageous."
"This has been a long-term problem," said Lueck during a phone interview Wednesday, Feb. 13. He noted he found the current arrangement baffling and wondered if there were puritantical reasons such a high tax rate on gambling is in place.
"We're taking a huge amount of dollars out of the local community, out of nonprofits-they just take it and it goes to the (Minnesota) Department of Revenue and into the general fund, where it goes to pay for the new Vikings stadium."
According to the 2018 Gambling Control Board Organization Annual Report, 340 charities, or 30 percent of charitable gambling organizations in Minnesota, pay more in fees and taxes to the state than they do their own operations, while the government in St. Paul is slated to receive $95 million in 2019 alone. For comparison, this tax brought in $40 million as recently as 2013.
Often, where this revenue is spent isn't immediately clear, Ruud said. Ruud and Lueck pointed to the construction of U.S. Bank Stadium, which opened in 2016-a $1.1 billion project, of which $498 million was publicly subsidized-as one reason the tax skyrocketed in recent years. Now that the stadium is constructed, Ruud and Lueck said there's little reason to penalize nonprofits like snowmobile outfits or Lions clubs with exorbitant tax rates.
"It's way beyond what is necessary for the Vikings stadium," said Lueck, who described opposition to the bill as stemming from a fundamental divide between small government, libertarian leanings in Greater Minnesota versus big government collectivism in the metro.
"Are we so petty in the state of Minnesota that we're going to tax the daylights out of volunteer labor?" Lueck said. "Give me a break."
