The American Gaming Association (AGA), the lobbying arm of the gambling industry, has jumped on the tax reform bandwagon.

AGA Geoff Freeman US tax reform bill

AGA President and CEO Geoff Freeman (seen here at a 2016 AGA presser) says that the details of any tax reform bill would have a large impact on the association’s members, who represent a broad spectrum of the US gambling industry. (Image: Erik Verduzco/Las Vegas Review-Journal)

One of the major goals of Republicans in Congress is to pass tax-reform legislation by the end of 2017, a move that has largely been supported by big business, due to proposed cuts to the corporate tax rate. But AGA’s lobbyists are now arguing that one aspect of the House version of the bill would be bad for business.

The Businesses United for Interest and Loan Deductibility Coalition (BUILD Coalition), a 14-member association that includes the AGA, have now sent letters to Senator Orin Hatch (R-Utah) and Senator Ron Wyden (D-Oregon) of the Senate Finance Committee, hoping to convince them to preserve full interest deductibility on growth investments.

House Bill Limits Interest Deductibility

Interest deductibility allows firms to subtract from their taxable revenues interest paid on investments made to grow their companies . The version of tax reform that is likely to pass the House of Representatives later this week would limit these deductions.

“While our Coalition fully supports efforts to enact pro-growth tax reform, we want to reiterate the importance of maintaining full interest deductibility for all businesses in order to accomplish this objective,” the BUILD Coalition wrote in its letter. “Tax reform should offer permanent, pro-growth solutions for businesses, but the proposal in the House tax plan to limit interest deductibility undermines these goals.”

A battle over this provision has been brewing for some time. In May, Bloomberg reported on a split between President Donald Trump, who had a “preference” for interest deductibility, and House Speaker Paul Ryan (R-Wisconsin), who wanted to eliminate the practice and replace it with immediate expensing.

Eliminating interest deductibility would raise $1 trillion in taxes over 10 years, which Ryan and other congressional leaders want in order to pay for other tax cuts.

Building for the Future

Some economists have argued that such immediate expensing would stimulate corporations to invest more. But the BUILD Coalition says it disagrees with this analysis.

“Full expensing is not a suitable replacement for full interest deductibility,” BUILD wrote in a piece on the topic on the coalition’s website. “At best, this would produce an economic sugar high at the expense of a time-tested, pro-growth policy.”

AGA President and CEO Geoff Freeman told the Las Vegas Review-Journal that the organization’s presence in the BUILD Coalition is a way of showing that the gaming industry is now a major source of growth and development in many communities across the country.

“The gaming industry is so vastly different than it was in 1986 in terms of our big-business nature and in terms of our omnipresence around the country,” Freeman said, speaking of the last time Congress looked at a full overhaul of the tax code.

“These issues will have a much more significant effect on us today than they would have in 1986 and it’s good for the AGA to be able to work with other allies on the issue,” he added.

GOP leaders feel they likely have the votes to pass the House version of the tax bill later this week, though the margin will be close. The Senate is expected to take up its version of the bill before the end of the year.