In California, sales tax is more stable than its income or business tax

Victor Joecks

Sen. Horsford and other big-government proponents are already trying to convince you that Nevada needs a broad-based tax to stabilize the revenue base. They’ve even created a tax study to try and provide some intellectual ammunition for it.

Instead of dealing with hypotheticals, let’s look at California, a state with sales, income and business taxes. How has the economic downturn affected its revenues?

The state’s revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang’s office.

Sen. Horsford, call your office! The sales tax was by far the most stable of all the taxes.

The bigger point is this: California has sales, income and business taxes, but it is less than 50 days away from a financial meltdown.

This is a direct refutation of all the “stable tax base” posturing that Nevada has heard in the last few months and is going to hear for the next two years. Having more sources of tax revenue does not lead to a more stable revenue stream and lower budget deficits.

A diverse tax code does not help, and the reason is simple: Diverse tax codes give state governments easier access to more money – dollars politicians can spend with little or no taxpayer accountability. Facing fewer limits on spending growth, states are significantly more likely to spend at unsustainable rates until the inevitable budget crunches arrive.

If Sen. Horsford and other proponents of the tax study are sincere about stabilizing the revenue base and not just trying to take more of your money, any new tax they propose should be revenue-neutral. That is, for every dollar collected by a new tax source, an existing tax should be lowered by a dollar.

Problem is, you can’t trust these politicians, even when they give you their word.