Gambling loses are deductible, but medical expenses only sometimes? The logic?

Great Debates
1

Why are gambling losses tax deductible? And more importantly, why are medical expenses not tax deductible as a matter of course? (The current structure allows deduction only to the extent medical expenses exceed 7.5% of your adjusted gross income.)

I cynically assume the gambling lobby is responsible for the first, but what explains the last? While the Republicans were eagerly cutting taxes, wouldn’t this have been a logical place to start (given rising national concerns over health care costs and the number of people who are uninsured)?

Or wouldn’t this make a dandy campaign issue for Democrats? Seems to me that Southern Democrats in particular might benefit by pointing out that vice gets you a tax deduction but medical necessity does not. If the numbers add up, propose to pay for a medical expense deduction by eliminating the deduction on gambling losses.

2

Gambling losses are only deductible to offset gambling winnings. For example: you win $8,000 one day and lose $5,000 another day. You can deduct the $5,000 since your net winnings for the year were only $3,000.

3

Does it make any difference to you that gambling losses can only be used to offset gambling winnings? So, you actually pay taxes on your net gambling winnings. You don’t really get a dedcution for gambling losses.

4

Ah. I misunderstood the gambling deduction. Embarrassing.

But we still have the question of why medical expenses are not deductible. Shouldn’t they be?

5

You can argue anything ‘Should be’ tax deductible. Then again, I argue that NOTHING should be tax deductible. Heatlh Care is a expense just like buying a car. The gambling statues (as have been explained) are actually based on other capital gains style structures. You MAKE money gambling you must pay taxes on that money, but you must actually ‘make’ money (that is a net ‘gain’). If I play Blackjack to the sum of $25,000 (of which all is used) and during that time I ‘win’ $10,000 you can see that I actually LOST $15,000.

Healthcare expenditures ARE dedictuble in a lot of ways (health care salary plans, health care ‘pre pay’ accounts (taken out of your check pre-tax)) much like ‘food’ is (as part of your ‘standard deductions’) but there is no line item for health care unless it is ‘excessive’ (at which point you CAN deduct it)

6

I think the argument is that normal medical costs are part of the standard deduction. Extraordinary medical costs, i.e., those that exceed 7.5% of your income, are deductible.

7

You can either take the standard deduction or itemize. Schedule A does not permit deduction of that 7.5%, so it wouldn’t make sense that the standard deduction does. But making sense is not a requirement.