NPRI comments on AFL-CIO opposing margin tax

LAS VEGAS — In response to the report that Nevada’s AFL-CIO has just voted to oppose November’s margin-tax ballot measure, according to political commentator Jon Ralston, NPRI President Andy Matthews released the following statement:

NPRI applauds the AFL-CIO for publicly detailing how economically destructive the margin tax would be to Nevada’s still struggling economy.

As NPRI has been saying for years and the AFL-CIO resolution notes, the margin tax would impose a large new tax burden on businesses that are losing money, including construction companies, and this new tax would bankrupt businesses throughout the state. We welcome the AFL-CIO’s support in helping the public understand that taxes — taking money out of the private sector — have destructive effects for individual families and the economy as a whole.

Earlier this week, NPRI highlighted one such example. Renee Newman and her husband own a construction company with about 70 employees. After the company lost money throughout the recession, Newman said that, “If we had to pay the margin tax last year, we would have closed.”

“The Newman story and the AFL-CIO resolution,” said Matthews, “highlight one of the many problems with gross-receipts taxation — it further hurts businesses that are fighting just to stay alive. The margin tax would cause many companies, especially construction companies that have been losing money for years, to close entirely.”

The AFL-CIO resolution opposing the margin tax reads in part:

Whereas: the Education Initiative does not take into consideration the losses those contractors have endured but instead burdens them with a tax based on the Gross Revenues from work they may perform; and

Whereas:  many contractors have gone out of business during these poor economic times and the Education Initiative may place a tax burden on the contractors and business which have been surviving on marginal returns forcing them out of business as the tax burden may be higher than the profit margin; [Emphasis added.]

Matthews noted that the AFL-CIO was originally a co-sponsor of the margin-tax initiative and has pushed several tax increases over the last few years.

“It’s strong evidence of how destructive the margin tax would be,” he said, “that even traditionally liberal organizations and politicians are now opposing it.”


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