The Nevada Legislature approved Gov. Brian Sandoval’s (R) $1.1 billion tax hike, funding increased education spending with a mix of business taxes and fees.
Sandoval signed the bill into law in June.
In January, Sandoval proposed increasing fees and taxes levied on businesses, in addition to creating a “margin tax” on businesses’ gross receipts.
Combining ‘The Worst Elements’
Sandoval’s tax plan increases licensing fees for businesses. The proposal also hikes the modified business tax, an excise tax on gross wages paid by businesses, and the state’s commerce tax, which taxes gross revenue.
Nevada Policy Research Institute Executive Vice President Victor Joecks says Sandoval’s new plan is the product of three bad ideas.
“Gov. Brian Sandoval’s new tax proposal combines the worst elements of all the tax proposals,” said Joecks. “He’s proposed increasing the Modified Business Tax, which is a tax on payroll that discourages job growth. He wants to create a new tax on gross receipts, and he’s looking to increase the cost of business licenses from $100 to $300 or $500.”
Joecks says Sandoval’s tax hikes will hit consumers hard.
“Sandoval also wants to make permanent the ‘sunset’ taxes, which means raising the sales tax, and he wants to increase the tax on cigarettes from 80 cents to $1.80 a pack,” Joecks said.
Record-Setting Tax Hike
Instead of helping the state, Joecks says Sandoval’s tax plan will drag state taxpayers down.
“The plan would hurt Nevada’s struggling families and businesses by increasing the costs of buying products and employing workers,” said Joecks. “Taxes limit economic opportunity. This will be the largest tax increase in Nevada history, which will cause businesses to close and lay off workers.”
Doing It Wrong
Americans for Tax Reform State Government Affairs Manager Paul Blair says Sandoval’s plan is a step in the wrong direction.
“Good tax reform requires broad-based tax rates that are low, fair, easy to understand, and don’t distort behavior,” Blair said. “All of Sandoval’s plans are literally the opposite of any of those basic principles. This is a clear case of government picking winners and losers.”
Blair says Sandoval’s plan does not advance the best interests of Nevada taxpayers.
“The goal of the governor and legislature shouldn’t be to extract as much money from taxpayers and businesses as possible to fund an exploding state budget,” Blair said. “The goal of the legislature should be bending the cost curve of government downwards to encourage new businesses to relocate to the state.”
Mark Ramsey ([email protected]) writes from Houston, Texas.
John L. Mikesell, “Gross Receipts Taxes in State Government Finances: A Review of Their History and Performance,” Tax Foundation: https://heartland.org/policy-documents/gross-receipts-taxes-state-government-finances-review-their-history-and-performance/