Getting Nevadans back to work: Great ideas from the Nevada Taxpayers Association

Victor Joecks

The Nevada Taxpayers Association has just released a terrific report detailing the reasons businesses aren't hiring as well as what Nevada lawmakers can do to enable businesses to grow and expand.

First, employers detail some of the many government regulations that are preventing businesses from hiring more people.

1. The cost per employee keeps rising – the modified business tax was increased, the unemployment insurance tax will increase January 1, 2011, and the federal health care provisions have started to kick in. How can I consider hiring anyone, when I don't know what it will cost me?

2. Why can't the local governments and the State look at what the federal government is doing and planning on doing to business (additional filings – 1099Ks, tax increases, increased regulatory burdens) before they add their burdens on us? Government, at any level, can't keep operating in a vacuum and expect me to survive. At what point will each level of government, that has decided they want more revenue, talk to each other to see the totality of the impacts to my business and my ability to hire?

3. I don't understand how the minimum wage can keep increasing when unemployment is so high. Why isn't there a realization that increasing the minimum wage in this economy just means I can't consider hiring entry level employees.

Government can't create long-term economic growth, but by raising regulations and costs and increasing uncertainty, it sure can do a great job of stifling economic growth.

Many of these government-created obstacles are the results of an intrusive and economically destructive federal government, but there's plenty that state politicians can do – either to make it worse or to create an environment that enables businesses to create jobs.

A couple of great suggestions from NTA:

2. Change the prevailing wage requirements to: (1) eliminate prevailing wage; (2) eliminate prevailing wage when construction unemployment is greater than 6 percent; or (3) increase the prevailing wage threshold from $100,000 to $2 million. …

3. Eliminate Nevada's 24 hour overtime rule, in favor of the federal 40 hour overtime rule.

NTA also suggests a couple of constitutional reforms to Nevada's minimum-wage law. While NTA's proposed reforms wouldn't be as beneficial as repealing the minimum-wage amendment, they'd certainly help.

About the only thing I disagree with in the NTA's report is this suggestion:

1. Provide that an employer who hires any workers who have been unemployed for six months or longer do not have to pay the modified business tax for that employee for four quarters. For the next four quarters the modified business tax is reduced 50 percent. Allow the reduction to continue for the length of time that unemployment remains more than 6%.

Reason: This would be a program similar to the federal HIRE program. It should also help mitigate the increases that will be occur in the premiums for unemployment insurance in future years. Most important, as no revenue has been generated from the modified business tax because these employees have been out of work, there would be no revenue loss to the State.

While I agree that the MBT is a disincentive to hiring, the government shouldn't be picking the winners and losers in the economy through subsidies – or tax breaks. Taxes should be low AND uniform.

When the government starts messing with the economy, no matter how good its intentions are, negative unintended consequences result.

With that small caveat, the NTA's report is really excellent, and there's a lot more in it than I mentioned above. You should read the whole thing.

(h/t Ralston's Flash)