In May 1998, Newt Gingrich held a three-tiered fund raiser in the Las Vegas Sands Expo and Convention center, a large casino and hotel complex run by Sheldon Adelson’s company, Las Vegas Sands Corp. Hoping to raise $100,000, Gingrich provided a private briefing to supporters for $2,500, appeared with others for $500 and then held a rally which cost $35 to enter, according to a report in the Las Vegas Review-Journal.
According to the Las Vegas Sun, Gingrich struck the right chord during his meetings with Las Vegas politicians and casino interests.
Nevada’s casino industry gained an ally with clout Sunday when House Speaker Newt Gingrich said he would work to block an Internal Revenue Service plan to tax meals casinos provide employees.
While in Las Vegas, Gingrich informed then Rep. John Ensign that he would block an IRS effort to collect taxes on meals provided by casino employers to workers. The gambling industry pushed both Democrats and Republicans to prevent the IRS from collecting these taxes. Eventually an amendment was added to an IRS reform bill which changed IRS rules regarding meals provided to workers. If 50% of employees are allowed to take free meals supplied by hotel owners in order to stay on their post, then all meals provided in that way to all employees would not be taxed as a form of compensation. To read the exact language, see the law with amendment at Section 5002. According to the Joint Committee on Taxation, the move cost the Treasury $316 million dollars (see below).
The Las Vegas Sun outlined the changes in a June 23, 1998 article:
The exact language of the amendment is still being drafted, but is expected to amend the tax code to allow all employees at a “business premises” to receive meals tax-free as long as more than half of the employees at that location are allowed to receive tax-free meals under current law.
In other words, as long as more than half the employees at a casino are food and drink servers or dealers — job classifications the IRS already recognizes as exempt from the meal-tax — then everyone else at that location is entitled to a tax-free lunch.
That language was drafted after casino operators throughout Nevada said it would solve the problem, Ensign said.
Rep. Ensign gave Speaker Gingrich and Senate Majority Leader Trent Lott ample credit for the change. According the Las Vegas Sun:
In the end, Ensign claims his personal lobbying carried the day.
“I went to the Speaker (of the House, Newt Gingrich), and to Trent (Lott, Senate Majority Leader) and said, ‘We have to have this,”‘ Ensign said in an interview.
A June article in the Review-Journal sounded the same theme:
“This really started getting momentum about the same time (House Speaker Newt) Gingrich came to Las Vegas (in May), and he held a news conference to support us,” Ensign said. “Then we got Lott on board.”
Gingrich also demonstrated favor toward the gambling industry in 2006 when he supported the removal of subpoena power from a commission devised to investigate the gambling industry.
As far as I know, none of these activities are illegal or unethical. I am not insinuating wrongdoing. Rather, I think Speaker Gingrich activities are noteworthy because he is now presenting himself as a Washington outsider. However, while in Washington, he was quite involved in fund raising and working as an insider to respond to donor requests.
The other interesting aspect to this story is the clear tie between Gingrich and the gambling industry. While he courts evangelicals and other family values voters, the lifeblood of his campaign and his non-profit work since the mid-1990s has come from Sheldon Adelson, the CEO of Las Vegas Sands. Gambling profits from the US and Asia are powering the Gingrich campaign. Given that evangelicals consider gambling to be a vice, it seems out of character for them to support a candidate with such a friendly relationship to that industry.
The provision [on employer provided meals] is estimated to reduce Federal fiscal year budget receipts by $20 million in 1999, $33 million in 2000, $34 million in 2001, $35 million in 2002, $36 million in 2003, $38 million in 2004, $39 million in 2005, $40 million in 2006, and $41 million in 2007.