This may have been covered before many time, but hopefully there's something new here and I'd like to understand any strong philosophical/fairness arguments in favor because I can't fathom any.

gambling winnings are not taxed in Australia. they are taxed in other countries. perhaps because I'm from Australia, i don't believe they should ever be taxed.

why?

we're gambling with after-tax earnings already in this gambling community of ours. if we choose as adults to move $$ around among ourselves as a zero-sum game (or negative sum after rake) then the government has no right whatsoever to selectively re-tax the successful pointy end of the community.

it's not like the rest of the economy where goods and services and wealth and income are generated in a positive sum game and part of that positive portion can be assigned to pay for common assets and services that benefit all.

i've always found that other countries who tax gambling income have a major ideological flaw and such a tax can only ever be considered a strategy to de-incentivise a gambling lifestyle. and it's a massive and unjustified penalty at the very least.

so what philosophical arguments might exist in favor?

Pretty much everything in the tax code is a carrot or a stick for some politically favored or unfavored group or activity.

Why can't you make the same "zero-sum" argument with any type of exchange of goods and services? Two consenting adults agree that a can of beans is $1 and so exchanging the items between each other for an agreed-upon value is zero-sum. Or that some stock is worth $20/share.

Also, the poker you play is part of a commercial enterprise. So even if the game itself is zero-sum-minus-rake for the players, some company is paying some person money to make the game happen. That company exists as part of the larger "positive-sum economy."

You also use the public roads to get to the casino. The casino is tapped into the city's electrical and water infrastructure. So you're pretending like your going to the casino, gambling inside the casino, or going home from the casino is being done off the grid even though you're clearly using public infrastructure to do it.

I think you need to come up with a stronger argument.

at a micro-economic level the person who made the beans made it from materials and labor that cost less than the sell price of the beans and the difference is profit which is taxable. if the person who buys the beans sells it for more than they purchased it for then the difference is profit which is also taxable. at a macro-economic level you have the aggregation of all such transactions; costs, profits, tax.

in a poker community it's different. the total amount of cash never increases. despite all the 'labor' involved there is no net income and no net increase in wealth. it is a mere redistribution of assets.

and the service provision earns income and profit through rake less the cost of providing the service and is taxed accordingly. this is not the poker community, but rather an enabling service for that community - in the same way that card, table, shuffle machine, felt, chair and other products and service that enable the poker community are not part of the zero- sum game the players themselves are part of.

a reasonable argument, but then so is the argument that zero aggregate income should not be taxed. taxing it again is double-dipping.

it's not as though professional players contribute nothing. they purchase assets, goods and services with their surplus funds which contributes to economic activity and taxation. and if you don't like the idea of them getting a tax-free income then consider that tax has already been paid on all the surplus funds they acquired by the original contributors of those funds to the poker pool. that money has already done it's job and paid for roads.

I actually agree with your last point to some extent, but your earlier points showed a disregard for economic theory and a curt dismissal of a considered and easily defended (math, economic) position that poker players do in fact participate in a zero- sum game.

And as that game generates no net income then it should not be taxed.

But the exchange of money is still a part of a larger economic engine that is making a profit. I think playing the "let's ignore the bigger picture" game is what is guiding your perspective and is probably an error.

You seem philosophically opposed to double-taxation. Is this anything more than an assumption you bring to the table?

Given that income taxes pay for quite a bit of the shared social good, I don't think it's actually true that the money has already done its job. Why should your income be exempt from taxation? Because you're not actually contributing as much to the rest of society? That seems like a good reason to tax you more.

This seems to be the driver behind your perspective on taxation. That the only things that should be taxable are net increases in income when measured at some macro-level. I mean, you can believe that, but that would be nothing more than an base assumption about the nature of taxation. Perhaps you would prefer to abolish income tax in general and just make a massive increase in sales tax?

Also, you seem highly defensive about this. I really don't care one way or another. You asked for reasons, and I just gave you a few. Maybe you don't agree with them, and that's fine with me.

Its seems like a more apt comparison is entertainment. We still tax Radiohead tours even though all the money to buy tickets was already taxed and is 0 sum. There is no net income between Radiohead and its fans etc.

I'm with oldsilver.

If poker winnings are income then poker losses should be able to be offset against income. If a company sells some good and makes a profit then they pay tax on those profits, if they make a loss one year they can offset those losses against future profits. (I think the last bit is true and the Trump tax offset seems to confirm) Problem is that Poker is generally a negative sum game among the players because of rake. Hence any tax that allowed poker losses to be offset against income at the same rate that poker winnings are taxed would incur a loss to the treasury.

Rake should be taxed clearly.

Short answer to the op: No.

How would you be getting the tax back when losing?

PoekerStars.eu is doing the right thing.

They should be taxed if your representatives in your government say they should be taxed.

Aaron please don't. Just state your arguments and let them stand on their merits. Comments like the above are unnecessary and grating.

If we tax income and profits then such taxation revenue is sustainable in the longer term. We're building income through labor and ingenuity, then assigning part of that income to the common good.

If we tax wealth in a pool of assets that never increases despite the labor applied to those assets, then such taxation is not sustainable. If you remove 30% of the pool every year for 5 years then only 16.8% of the pool remains. After ten years it's almost vanished.

Taxation must be sustainable and therefore, yes, i have a philosophical objection to taxing illusory income within a system that only redistributes wealth rather than creating income/profit.

Radiohead are creating profit/income through this transaction. The economic cost of supplying the service is less than the economic value of the compensation they receive. They can and should be taxed on such income.

Poker is entirely different. Nothing of economic value is created. No income/profits are generated through participants' labor/ingenuity. Assets are merely redistributed from one party to another within the system.

But you're making a lot of assertions. If your assertions are unassailable, then there was no reason to create the thread in the first place.

Again, you seem to be saying that since you do not produce any economic activity (that is, you do not produce any macro-level income), that you should be exempt from contributing to the common good.

But the state has still provided you with ongoing infrastructure and support. If there's no positive economic activity but the government is still expected to maintain roads, water, and electricity, then you would expect the state to go bankrupt. This has nothing to do with the sustainability of the taxation method, but rather the fact that there's a minimum required level of overhead that must be paid for one way or another.

What does it even mean for taxation to be "sustainable"? As I've shown above, if there's no positive economic activity, the fixed costs of running the state will cause it to go bankrupt. This would say that only taxing macro-level profits would also be unsustainable for the government.

You seem to be making two non-analogous perspectives.

Consider all of the money that all of the patrons of Radiohead bring to the concert. Within the confines of that concert, it's a zero-sum game. The amount of money walking in is equal the amount of money walking out.

This is how you're viewing poker.

then leave your arguments on economic theory aside, because i have a deeper understanding than you on those issues, and let's discuss the philosophy of taxation because i actually agree with many of the points you've raised there and it's entirely the purpose of the thread and we can have an interesting and fun argument around that. but drop the personal stuff?

to restate my position:

taxing income/profit is good because it is sustainable

taxing wealth (the accumulation of after tax surplus income/profits) is bad because it is not sustainable

taxing arbitrary blips of asset redistribution in a zero- sum game is nonsense

lol no, Radiohead makes the profit.

the transaction is between Radiohead and each individual patron, not each patron with each other patron.

i think the point that was originally intended to be made is this: that people transact with after-tax dollars all the time and that tax can still be paid further down the chain.

that's true of course, but it requires that someone down the chain makes a profit by acquiring something of higher economic value than what they've exchanged. in a poker community this never happens.

yes, these are better arguments.

so now we have to balance whether these should outweigh another argument that taxing anything other than income/profit is unsustainable/unfair/arbitrary.

to what extent and why should tax be 'fair'?

i believe it should and will come back to this.

sustainable = can continue in the long term

if the government doesn't go bankrupt in a zero sum game economy, then the participants eventually will (and then the government in due course)

I am nearly certain that the broader economy is not a zero-sum game. I am completely certain that taxing gambling income is both 1) highly sustainable and 2) completely irrelevant to a government going bankrupt.

This seems really arbitrary to me. You make money in poker by proving action, which is something that people who lost money in the game wanted.

I don't see how taxing Radiohead is any more or less sustainable than taxing poker.

it's only 'sustainable' because there appears to be an insatiable appetite for new and existing participants to plow more after-tax earnings into the pool. the pool itself generates no additional profit/income.

i'm seeing these things as self-evident. such comments are surprising to me. maybe after multiple economic majors and years of owning/running a business, adding value and being (correctly) taxed on the income derived from that value-add, i've assumed certain truths about the process.

the labor/efforts used to create the service (Radiohead performance) is generated from an almost infinite resource i.e. certain people strumming guitahs and singing.

if you tax the earnings derived from an infinite resource then by definition you can continue to tax it forever. it's sustainable. i can't think of any other word for it and don't think any other word is necessary. taxing such income/profit can continue indefinitely.

gambling does not create anything of economic value however, and does not generate any net/aggregate income for the participants. there is no economic value created. money comes in and despite the huge number of transactions and very large amount of labor, precisely the same amount of money (less rake) in the precise same economic units (cash or equivalents) are taken out. if you tax the poker community then you are retaxing a pool of after-tax wealth and my proposition is that taxes on wealth are unsustainable and unfair, and that taxes on (usually) short-term and arbitrary redistributions of wealth are even more unfair.

given that the inputs to the poker community are after-tax dollars then any income to certain participants is an illusion. only further injections of after-tax dollars from other participants can support such a system.

Just as the best player at the table makes the profit.

So we play a bunch of heads up matches and Radiohead wins. I still don't see how it's any different. There's a fixed amount of money on the table. It's not as if Radiohead walks away and suddenly money appears out of nowhere.