Senator Cruz’s Gambling Tax Critique Misses the Bigger Picture
On the July 27 episode of the "Verdict with Ted Cruz” Podcast, Senator Cruz passionately highlights a troubling provision in the recently passed “One Big Beautiful Bill” that affects how gambling losses are deducted. Previously, gamblers could deduct 100% of their losses from their winnings, ensuring they were only taxed on actual net gains. The new provision, however, limits deductions to 90% of losses, meaning some players are now taxed on income they didn’t effectively earn. Cruz rightly called judged unfair the fact that taxes can be owed even if a person, on net, loses money. His push to reverse this change through new legislation is commendable, as it addresses a clear injustice in taxing phantom income.
However, while Cruz’s focus on the gambling provision is valid, it’s like treating a pimple while ignoring a gaping wound. He admitted he was unaware of the gambling provision until after the bill’s passage, revealing the messy, often opaque sausage-making process of tax legislation. This oversight is troubling enough, but incredibly, by missing the gambling issue, he also overlooked far more egregious provisions in the same bill which I discussed in my July 24 Blog post in these issues, which can be viewed here. For instance, the complete elimination of miscellaneous itemized deductions—such as those costs incurred for earning income and unreimbursed employee expenses —forces taxpayers to shoulder tax burdens by paying taxes on income they did not get. If the concept of taxing phantom income is problematic in gambling, as Cruz argues, it’s exponentially worse in these other areas, which affect a far larger portion of taxpayers, yet he remained silent on them.
Cruz’s selective outrage underscores a missed opportunity to address the bill’s deeper flaws. Provisions like reduced charitable deductions and limitations on itemized deductions further erode the fairness of the tax code, reducing equitable aspects of the internal revenue code. These changes, which Cruz supported, (intentionally or unknowingly) disproportionately harm middle-class taxpayers and small business owners who rely on deductions to offset legitimate expenses. While his gambling critique is a step in the right direction, it’s disheartening that he didn’t connect the dots to these broader injustices. If Cruz is serious about fighting unfair taxation, he should champion a comprehensive overhaul of the bill’s most damaging provisions, not just spotlight one narrow issue.