In Minnesota, legislative tax committees are considering a measure to exempt charitable donations from the state gambling tax rate. In 2016, the nonprofits donated million to charities, but paid .6 million in state taxes, according to the Minnesota Gambling Control Board’s annual report.
Currently, a charitable gambling organization pays out more than 80 percent of its sales in prizes to its patrons. The remaining 20 percent is taxed from 9 to 36 percent, depending on how many pulltabs and other forms of gambling the organizations sell. Whatever is left is spent on charitable donations, building maintenance and expenses. The proposed legislation only would lower taxes on the money organizations donate to charitable causes.
John Lamm, gambling manager for the Lake Washington Improvement Association, said lowering the high tax rate would help his organization, and the community. “I think more should be done than that, but this is a start. What we’re paying them is phenomenal,” he said.
Mark Healy, gambling manager for Community Charities of Minnesota, one of the biggest charitable gambling organizations in the state, said the group paid more than $65,000 in state taxes in January alone, and local taxes in some communities take even more from gross receipts. “What’s unfortunate about this is we can get money to charities and needy people a lot quicker than the legislature can,” he said.
One reason the legislation could fails is that charitable gambling has helped fund construction costs for U.S. Bank Stadium since 2012. Minnesota Department of Revenue Tax Policy Manager Paul Cumings said the proposed tax relief could have a negative impact on stadium funding, and as well as the state’s general fund.
Al Lund, executive director of the Allied Charities of Minnesota trade group representing 1,200 organizations statewide, said, “Our members are more and more getting to the tipping point, so more are realizing that they need to get involved. What our charities are saying is we didn’t get involved to become a primary tax collector for the state. We got involved to help our community.”
