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Our Opinion: Reduce taxes on charitable gambling

Taxes, when applied fairly and proportionately, have an important function at all levels of government. When taxes do more demonstrable harm than their intended good, our elected officials must rein them in.

Case in point is the tax applied to charitable gambling activities. For years now charitable gambling advocates in Minnesota have been sounding the alarm over the inordinate amount of taxes the state has been collecting from pull tabs, bingo or other charitable gambling activities.

Up until now, very few in the Minnesota Legislature seemed to take the concern seriously, and year after year more local organizations were closing the charitable gambling arms of their operations because it wasn't fiscally responsible to operate them.

This year could be different, and we are encouraged to see Sen. Carrie Ruud, R-Breezy Point, and Rep. Dale Lueck, R-Aitkin, step up to the plate. Ruud and Lueck recently co-introduced bills in the Minnesota Senate and Minnesota House, respectively, to reduce tax rates by 50 percent across the board for charitable gambling.

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.

The culprit in all of this has been the Legislature, which in 2012 tied taxes on charitable gambling to stadium funding. As Ruud and Lueck noted in a Feb. 14 story in the Brainerd Dispatch, there's little reason to penalize nonprofits like snowmobile or Lions clubs with exorbitant tax rates now that U.S. Bank Stadium is built.

"This has been a long-term problem," Lueck said. "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."

In July of 2017, this editorial board also advocated for a reduction in taxes on charitable gambling organizations. At that time, Allied Charities Minnesota reported charitable gambling was taxed at seven times the rate as a corporation and about three organizations a month were dropping charitable gambling. Charities were paying more in taxes than they give out in donations.

Our stance is the same today as it was in 2017—more of the proceeds nonprofit groups raise from charities should stay in our communities. That money should be used to fulfill the local charitable organizations' goals, which is to help the people or groups that need it most.