(FORTUNE Magazine) – The op-ed pages are chockablock with chatter about tax proposals, but hardly anybody has noticed that one new proposal is already moving forward. While others talk, Steny Hoyer acts. What, you never heard of Steny from Prince George's County, Maryland? He who was proclaimed a ''rising star'' by the National Journal in 1990 and later went on to become Democratic Whip in the U.S. House of Representatives despite being occasionally sighted at equine race tracks? We mention the steed connection because his tax amendment happens to concern the selfsame species. Wildly unfair and guaranteed to raise little or no new revenue, it whooshed through the House like Epsom salts and is evidently gaining momentum in the Senate. Forget about Elvis. Benedict Arnold is alive in Maryland, and the tax on horse players is rising again. What, you never heard of this godawful impost? It works like this. Suppose a horse player bets at least $2 and ends up winning at odds of 299 to 1 or more. (The doubles, exactas, trifectas, and other ''exotic'' bets offering such payouts now account for something like 70% of betting volume.) Before he can collect, he must provide I.D. plus a Social Security number and accept an IRS W-2G form. In case you are wondering, the G stands for ''gambling.'' If any such longshot ticket is worth $1,000 or more, the race track must also deduct 20%. In the interest of full disclosure, it will now be mentioned that the present typist had a losing year overall in the turf account and yet managed to accumulate four W-2G in 1991. The Hoyer amendment would raise the federal withholding rate from 20% to 28%. There is no reason to believe that this hike will increase federal tax revenue. Because of the I.D. requirements at payoff windows, all the winnings involved get reported and whatever tax is owed is presumably paid. The principal effect of raising the withholding rate is to reduce the money available for rebetting -- the ''handle'' on which the racing industry depends. How much might the handle decline? Summarizing many different studies of betting demand, economist Maury Wolff of the Racing Resource Group (an industry consulting firm) comes up with a price elasticity of -1.5. That figure tells us a 1% increase in the tax on bettors results in a 1.5% decrease in betting volume. Parimutuel betting is a model of supply-side economics. Turning aggrievedly to the fairness issue, why should there be any withholding at all? In most contexts, the IRS demands a bite only on income received. For the sake of argument, let us agree that a winning ticket is income (while noting in parentheses that most civilized countries, including even overtaxed Britain, do not tax gambling winnings). But that ticket surely does not represent net income. The U.S. tax code says you pay on your winnings less your losses, yet the withholding clearly applies only to your winnings. So the feds are endlessly in the position of withholding the income of net losers, a proposition that would be unthinkable if the victims in question were dentists or homebuilders, or any other constituency getting a little respect from the politicians. Incidentally, the IRS is not the only thief in the night in our scenario. A number of states have also begun to withhold on race track winnings, and New York is of course a leader in this department. At Mario's instigation, the state recently began taking 8%, and New York City went for 4%, so with the federal 28%, horse players in Gotham will soon enough be withheld for 40% of the value of their tickets. To be sure, some of these pitiable creatures will get a refund months later -- but only if they itemize and have good enough records to demonstrate offsetting losses. And dare to ask their wives to sign a tax return showing the real cost of all those days at the races.