Broad-based taxes = disaster

Patrick Gibbons

*Nevada’s legislature wants you to pay more taxes and then not complain during the next budget shortfall.

Recently Senator Horsford called for a broad-based business tax, adding his voice to a broad-based fantasy. As previously noted, a broad-based tax helps no state avoid budgetary collapse.

Looking at the whole nation, states with broad-based taxes were twice as likely as others to face a FY 2009 shortfall. On average, broad-based tax states faced shortfalls that were 7 percent of their operating budgets. States with no income taxes faced shortfalls of just 3.6 percent, on average.

More simply: States with broader taxes were twice as likely to face shortfalls, and those shortfalls were twice as large as in states that have foregone corporate and personal income taxes. Nevada not only needs to avoid expanding its tax code, it needs to avoid raising taxes.

While the evidence is clear, some still ignore it. One ploy is to point to Arizona, a state with a more diverse tax code, a slightly smaller projected shortfall for FY 2010 and a smaller unemployment rate. It implicitly is asserted that this single state proves that more taxes are better.

Of course, that’s nonsense. As it turns out, Nevada’s projected shortfall stems mostly from the governing class’ demand for a 17 percent increase in spending. We are told that 17 percent is necessary to “maintain services” over the next biennium.

Arizona, by comparison, requires less than a 6 percent increase to “maintain” services over the next fiscal year. Even when looking at Nevada’s individual years, the state is demanding more money to maintain services than Arizona, a state that is very similar to our own.

New taxes aren’t needed. We need a fiscally prudent legislature that figures out creative and innovative ways to solve budgetary problems.