CARSON CITY, Nev. — The “jobs” plan offered today by Nevada’s Senate Democrats evaded the central problem facing genuine job creators in the state, says Geoffrey Lawrence, NPRI’s deputy policy director.
“It's disingenuous for Nevada lawmakers to talk about promoting job growth at the same time that they perpetuate some of the most strenuous regulatory structures and filing requirements in the nation,” said Lawrence.
He noted that a recent Institute for Justice study found that “Nevada is among the top tier of the most broadly and onerously licensed states, ranking fourth.”
Rather than face that reality, Lawrence said, Senate Democrats proposed new tax credits for the film industry, moving funds from the state's operating budget into the highway fund to finance public-sector construction projects, moving more funds into the state's Knowledge Fund and creating new incentives within the state's Modified Business Tax.
“Unfortunately for struggling Nevadans,” he said, “the ‘jobs’ plan unveiled today is simply a retread of stale and failed government programs. None of the items introduced by Senate Democrats addresses the core factor that hinders economic growth — the obstacles that Nevada government places in the way of private entrepreneurship.”
The film tax credit idea is an especially poor way for government to pick winners and losers in the economy, and many states are now dismissing film tax credit ideas as failures. Arizona, Arkansas, Idaho, Iowa, Kansas, Maine, New Jersey and Washington have all effectively eliminated their programs since 2009. According to the Tax Foundation:
“Film tax credits fail to live up to their promises to encourage economic growth overall and to raise tax revenue. States claim these incentives create jobs, but the jobs created are mostly temporary positions, often transplanted from other states. Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or states.”
Lawrence noted that spending on state construction jobs is especially wasteful because prevailing wage laws mandate that state and local governments pay wages that are 44 percent or more higher than in the private sector. He said:
If financing government construction and research jobs improved the economy, the $787 billion federal stimulus wouldn’t have been an utter failure. Instead, what Senate Democrats are proposing would only create short-term jobs for favored interest groups.
Lawrence found it “at least encouraging that Senate Democrats acknowledge that the Modified Business Tax is a disincentive for hiring workers.” However, he said, the answer isn’t creating exemptions for favored firms, but to eliminate the tax entirely. He continued:
A much more effective approach for promoting economic development and job creation is to lower the administrative, legal and financial burdens that have been placed on entrepreneurs by state and local governments. How genuine is it for Nevada politicians to talk about promoting job growth when, at the same time, they refuse to deal with one of the most onerous sets of regulatory structures and filing requirements in the nation?
The recent Institute for Justice study Lawrence cited noted that “not only are [Nevada’s] fees many times higher than other states, but the experience and education requirements are as well:
Nevada is one of only four jurisdictions that license interior designers, requiring one exam, $250 in fees and six years of education or experience; meanwhile 47 states do not license interior designers. On average, the 21 states that license travel guides require $191 in fees and 58 days of education; Nevada requires $1,500 in fees and two years of education.
“Entrepreneurs,” noted Lawrence, “are Nevada’s job creators. And entrepreneurs, like Amy Groves, Carolyn Davis and Scott Godino, Jr., have identified government as their biggest obstacle to creating jobs. If you want sustainable economic growth, you must scale back government barriers to private-sector job creation.”
For policy solutions that would truly promote job growth, Lawrence recommended those in The Path to Sustainable Prosperity, a recent report by the Nevada Policy Research Institute.
- Amy's story: How Nevada restricts real estate professionals
- Carolyn's story: How onerous licensing requirements hurt would-be entrepreneurs
- Scott's story: How government put his business 'through a circus'