He’s got the wrong idea
State Sen. Bob Coffin recently commented that, “Everything is on the table.” The Las Vegas Review-Journal reported that Coffin stated, “That is code that any tax that can be raised to balance this budget will be raised or considered-mining, gaming, all industries are vulnerable to the necessities, the urgencies of balancing this budget.”
This is precisely the wrong thing to do-especially since Nevada’s government faces a minor 1 percent decrease in spending between this budget and the next. The real crisis is that businesses in Nevada face declining revenues while unemployment is projected to top 11 percent by the end of this year. Businesses in Nevada, now more than at any time in the past, need profits.
Profits allow businesses to expand operations, invest in new capital, or hire much needed laborers. All of this is necessary if we’re going to pull ourselves out of this mess. Raising taxes on businesses reduces profits-exactly the opposite of what we need to see.
Raising taxes doesn’t balance the budget, either; in fact, the budget is already balanced. Raising taxes simply increases government spending, and that doesn’t always mean better or more productive services from the state. Even at their best, tax increases provide a negative stimulus to Nevada’s economy.
We can’t rely on Washington to provide the stimulus necessary to get our economy working, either. In fact, their plan is to increase borrowing-ironic considering America is indebted up to its ears. Businesses in Nevada don’t need any more debt; they need to increase profits.
One way Bob Coffin could help stimulate Nevada’s economy would be to eliminate the Modified Business Tax (MBT), a gross payroll tax on each dollar paid to each worker in the state. All things equal, eliminating the MBT will lead to wage increases and marginal increases in employment. After all, lower costs mean higher profits, which in turn become new capital, allowing expansion of services and the concomitant hiring of new laborers.
Eliminating the MBT would allow Nevada’s economy to grow based on the needs of Nevada’s residents, not the whims of self-interested policymakers.