Taxing Lies

A couple of years or so ago, Nevadans were being told, up and down the state, that state schools were paying teachers shamefully low salaries. Then the American Federation of Teachers—somehow singing from the wrong songbook—happened to mention that Silver State teachers, compared to their colleagues around the country, were making significantly better-than-average salaries. Oops.

So then the new line coming out of the Nevada teacher union became, “Well, it’s a problem with average salaries in Southern Nevada: They’re significantly lower than in the rest of the state.” At which point some news reporters pointed out another inconvenient fact: That it had been the teacher union itself—in what the Las Vegas Review-Journal termed a “blatant protection racket”—that had until recently made sure its contract with the Clark County School District required that new hires started at entry-level pay regardless of experience. This rule virtually guaranteed that no experienced out-of-state teachers would want to teach in Vegas public schools—a fact which necessarily dragged down the county salary average, since now virtually all new teachers were newbies, fresh out of school. Oops again.

At about the same time—1999 and 2000—the teacher union wanted to publicly justify its statewide initiative campaign to impose a stiff 4 percent income tax on Nevada business. Nearly all of the revenue would have been channeled directly into union members’ pockets. But what the union said publicly was that the State of Nevada faced a “structural deficit.” It was more fiction: Structural deficits in government finance are those that persist even during economic boom times—which wasn’t Nevada’s experience during the 1990s. But then, “structural deficit” sounds so much better than “years of drunken-sailor over-spending by teacher-union glove-puppets in the Nevada Legislature.”

Unfortunately for union bosses, in early 2001 the state Supreme Court unexpectedly ruled that the union tax scheme would violate the Nevada constitution. Suddenly the whole tax-hike campaign was back at square one, in rags and tatters.

But that left an opening for the state’s other 800-pound gorilla, the Nevada Resort Association (NRA), and its handpicked governor, Kenny Guinn. They, too, wanted to end the Silver State’s long history of friendliness to taxpayers and non-gaming businesses. They just hadn’t liked the union’s approach.

So now Guinn and the gamers took over, telling the teacher union to sing backup. The new approach would be one with which the threesome had succeeded 14 years earlier: a disingenuously stacked “citizens commission”—conveniently barred from looking at chronic patterns of state government waste and over-spending.

So the next big whoppers aimed at Nevada taxpayers came from the so-called “Governor's Task Force on Tax Policy.” Loudly dominated by casino owners, its staff led by gaming-industry contractors or outright NRA employees, the panel produced just the report its masters wanted.

Later, independent economists going over the panel’s reports would find that, sure enough, staff had put its thumb on the scale. Numerous ploys had been used to maximize estimates of future state costs and minimize estimates of future state revenues—guaranteeing that final reports would justify big new taxes on working Nevadans and their employers.

Surely the crème de la crème of Big-Taxer mendacity, however, has been the huge advertising buys of the self-styled “Nevadans for Tax Fairness”—a very funny name for the Nevada Resort Association and billionaire Brian Greenspun. The fact is—as multiple studies have shown—Nevada casino industry taxes don’t begin to cover the actual infrastructure, social and other costs the industry now runs up in the Silver State. That tab, for decades, has been picked up by working Nevadans and their employers.

But gee, doesn’t gaming pay “50 percent” of the state budget? Nope. The NRA likes to call the state general fund “the state budget”—but the GF is only about 35 percent of the real state budget. And in recent years gaming revenues have only been around a third of the general fund. What’s a third of 35 percent? About 12 percent!

The federal Bureau of Economic Affairs calculates the real numbers for all state and local business taxes paid in the Silver State: For the year 2000, Nevada’s non-gaming businesses paid 81 percent, while the gaming sector paid only 19 percent. And that included all taxes paid by the gamers—even their famous gaming and property taxes.

Truth is said to be the first casualty of war. If so, the high-tax crowd clearly has highly lethal designs on every member of the Nevada public.

Steven B. Miller is policy director for the Nevada Policy Research Institute.