Taxes, taxes and taxes: Lawmakers consider numerous ways to take more taxpayer dollars
In her opening speech for the 2013 Legislative Session, Assembly Speaker Marilyn Kirkpatrick vowed to begin on Day 2 a discussion on reforming Nevada’s tax structure.
Since the opening, however, there has been very little public discussion about tax reform, but many proposals on ways to raise taxes.
Despite Nevada’s fragile economic situation and the tens of thousands of families who’ve lost jobs or homes, some legislators still want to wring ever more out of struggling taxpayers.
Here are just some of the many tax increases under consideration at the Legislature.
Extending the sunset taxes: In March 2012, Gov. Brian Sandoval announced that he would support raising taxes by again renewing the “temporary” sunset taxes scheduled to expire on June 30, 2013. The sunset taxes include a sales-tax increase, a vehicle registration tax increase, doubling the business license fee and a doubling of the modified business tax (though Sandoval has also proposed excluding some businesses from the MBT entirely).
Sandoval justified breaking his “no new tax” pledge yet again by stating he wanted to avoid “further cuts to education” and would call for “flat” budgets.
The governor, however, has proposed spending tens of millions of dollars expanding education programs known for their waste, such as pre- and full-day kindergarten. He also proposed increasing state government-employee pay by eliminating furlough days.
Raising the gasoline tax: Senate Bill 377, proposed by Sen. Tick Segerblom, would increase the gasoline tax by 2 cents each year for the next 10 years. Assembly Bill 413, introduced by the Assembly Taxation Committee, headed by Irene Bustamante Adams, would permit the Clark County Commission to tie the county’s 9-cent-per-gallon tax to inflation, ensuring the tax could increase every single year.
According to an estimate by the Las Vegas Review-Journal, these gas taxes, combined, would in 2017 increase by $2.50 the cost of each fill-up of your tank. The cost would then increase each year thereafter.
Segerblom, however, thinks taxpayers won’t even notice, saying his tax would be “meaningless” for the average consumer.
Property-tax increases: AB 26 and AB 201 would both lead to dramatic increases in property taxes by significantly raising owners' tax liability.
Currently, the value of all improvements on a piece of real estate — your house would be one — depreciate for tax purposes at a rate of 1.5 percent a year for up to 50 years. AB 26 would reduce the depreciation rate to 1 percent.
Imagine your 25-year-old house is worth $100,000. Currently, for property-tax purposes, your house has depreciated down to a taxable value of $62,500. If this bill had already taken full effect, your tax liability would be based on a $75,000 evaluation, a 20 percent increase in this scenario.
Currently, property-tax assessments are based on 35 percent of a property’s taxable value. AB 201 would increase the assessments to 45 percent of a property’s taxable value over the next 10 years. That would be a 28 percent increase in your property-tax bill, all other things equal.
While Nevada has one of the most confusing property-tax systems in the entire country, rigging it to increase taxes is not the solution.
Washoe County School District’s tax-increase proposal: AB 46, which would raise the property tax in Washoe County by 5 cents per $100 in assessed value and increase the Washoe County sales tax by .25 percent, passed the Assembly Taxation Committee on Tuesday. These taxes have no expiration date and would go to fund school facilities.
Washoe County School District officials have already admitted that they won’t be satisfied with this tax increase and expect to ask voters for a “rollover bond” in upcoming years. WCSD officials are also complaining that “sixty percent of District schools are more than 30 years old” even though the average age of school buildings in the U.S. is 50 years.
Of course every school needs maintenance and repair, but that’s why WCSD receives over $10,300 per pupil — excluding capital costs and debt service.
Higher-paid cops tax: Are you the same person you were in 2004? Is Nevada the same state with the same economy as in 2004? Is a non-binding advisory vote from almost 10 years ago still binding now?
Of course not, but that hasn’t stopped the Las Vegas Metropolitan Police Department from flogging a non-binding pre-financial crisis assent by Clark County voters to push for a quarter-cent hike in the Clark County sales tax. Metro lobbyists are trying to sell this as a “more cops” tax hike, but they also want the “flexibility” to merely spend the money on higher compensation for existing cops.
That’s because the recession has shown that unsustainable increases in Metro salaries and benefits are truly unsustainable. Rather than fix Nevada’s out-of-whack collective bargaining laws, which have led to 149 Metro employees making more $200,000 in total compensation in 2012 and one captain raking in over $585,000, Metro brass want you to pay more.
Margin tax: The margin tax is before the Legislature because the Nevada State Education Association spent over $644,000 getting signatures on an initiative petition. NSEA’s plan would assess a 2 percent tax on gross receipts, minus certain deductions. The tax would be assessed on any business taking in more than $1 million in gross receipts, including businesses that are losing money.
A margin tax of just 1 percent in Texas devastated small businesses. According to Will Newton, executive director of the Texas office of the National Federation of Independent Businesses, “roughly 20 percent of small businesses reported that they would have to lay off employees and another one-third reported they would have to leave jobs unfulfilled” because of the Texas margin tax.
Because the margin-tax proposal is an initiative petition and the Legislature failed to approve it within 40 days of the start of the session, it will be on the 2014 November ballot.
In 2010, Gov. Brian Sandoval stated that raising taxes is "the worst possible thing you can do" if you want to recover from a recession. Despite his own breach of that principle, it remains absolutely correct.
While Nevada’s families and businesses continue to deal with the fallout from the worst recession in the state’s history by prioritizing and reducing their spending, many state politicians and special-interest groups seem callously eager to just bleed taxpayers with no end in sight.
Victor Joecks is the communications director at the Nevada Policy Research Institute. For more visit http://npri.org.