SB551 Testimony (Modified Business Tax)

Testimony in Opposition re: Senate Bill 551
Senate Finance Committee
Wednesday, May 28, 2019


My name is Daniel Honchariw. I serve as senior policy analyst for the Nevada Policy Research Institute.

NPRI opposes SB551 on both policy and, potentially, procedural grounds.

In terms of policy, the proposal to extend the current Modified Business Tax rate represents only the latest move to increase the cost of doing business in the Silver State. We already expect the passage of Senate Bill 312 — mandating paid sick-leave — as well as Assembly Bill 456, which will raise the state’s minimum wage to $12 over the next several years.

In each instance, such mandates effectively act to increase the tax burden on business and lessen the likelihood any business will expand, succeed, or hire additional workers.

Here, an unwillingness to allow the MBT rate to decrease, as statute currently demands, would constitute another attack against Nevada businesses, many of which had surely been operating under the impression these tax rates would decline.

In terms of our potential procedural concerns, we fear the passage of this bill with anything less than 2/3 support may conceivably create a constitutional crisis of sorts. Notwithstanding the Legislative Counsel Bureau’s recent legal opinion which suggests otherwise, it’s difficult to comprehend how the proposed MBT extension being approved with anything less than 2/3 support would pass constitutional muster because it appears to defy the plain text under Article 4 of the state constitution.

This concerns us greatly, because it virtually guarantees litigation going forward. No matter where the courts ultimately land, this benefits nobody. Not only will taxpayers be forced to spend thousands of dollars to subsidize the cost of such litigation, but there will be a looming cloud of uncertainty over the state for months, and potentially devastating budgetary implications if a court rules against the extension. It would result in absolute fiscal chaos for an unknown period of time.

Thus we urge this committee to oppose SB551.