Senate Revenue, Feb. 17

Geoffrey Lawrence

In today’s Senate Revenue Committee meeting, committee members heard a presentation on the targeted tax incentives given to large businesses who promise to invest in Nevada. The presentation was delivered by Michael Skaggs, Executive Director of the Commission on Economic Development.

Skaggs reviewed state programs for temporary tax abatements pursuant to NRS 360.750. This statute permits the Commission on Economic Development to grant targeted tax breaks to businesses that are consistent with the “State Plan for Industrial Development and Diversification that is developed by the Commission.” (Read: businesses whose lobbyists gain political favor in Nevada.)

NRS 360 allows politically-favored firms to receive special abatements on the local school support tax, property taxes, and the state payroll tax (MBT). These tax breaks are in addition to the rebates that many well-connected firms might receive through tax-icrement financing or STAR bonds.

The ostensible purpose of these abatements is to incentize new business to move into the state and create jobs. However, a report prepared by legislative staff in 2009 revealed that many tax breaks awarded by the Commission on Economic Development completely fail to achieve this purported objective.

In 2006, for instance, the Commission awarded $5.6 million dollars in local school support tax abatements and a 50 percent abatement in payroll tax liability for four years to Solar Star in Clark County. In return, Solar Star hired a single worker who made $21.15/hour.

NPRI has always held that the best method of encouraging job growth and small business development is through a low, but uniform, tax and regulatory burden, combined with a well-functioning education system. Moreover, these two important components are not incongruous, as our friends on the Left would have you believe. NPRI has repeatedly demonstrated, using empirical evidence, that Nevada’s educational system can see dramatic improvements through structural changes that would also imply a cost savings for taxpayers.

Targeted tax incentives create an uneven playing field that disadvantages the growth of native, small businesses to the benefit of politically-connected, large corporations. They also can foster an attitude of corruption and lead to inefficient decision-making.

Moreover, opposition to “corporate welfare” is one policy stance that enjoys widespread agreement from across the political spectrum – from Grover Norquist to Ralph Nader. In Nevada, not only has NPRI remained critical of this practice, but so was former Assembly speaker Barbara Buckley, who admirably fought to curtail this practice in the 2009 session.

Today, Senator Sheila Leslie voiced some concern over the use of corporate welfare in this state. Hopefully, Senator Leslie does not forget this important issue and works to curtail the practice in Nevada.

Geoffrey Lawrence

Geoffrey Lawrence

Director of Research

Geoffrey Lawrence is director of research at Nevada Policy.

Lawrence has broad experience as a financial executive in the public and private sectors and as a think tank analyst. Lawrence has been Chief Financial Officer of several growth-stage and publicly traded manufacturing companies and managed all financial reporting, internal control, and external compliance efforts with regulatory agencies including the U.S. Securities and Exchange Commission.  Lawrence has also served as the senior appointee to the Nevada State Controller’s Office, where he oversaw the state’s external financial reporting, covering nearly $10 billion in annual transactions. During each year of Lawrence’s tenure, the state received the Certificate of Achievement for Excellence in Financial Reporting Award from the Government Finance Officers’ Association.

From 2008 to 2014, Lawrence was director of research and legislative affairs at Nevada Policy and helped the institute develop its platform of ideas to advance and defend a free society.  Lawrence has also written for the Cato Institute and the Heritage Foundation, with particular expertise in state budgets and labor economics.  He was delighted at the opportunity to return to Nevada Policy in 2022 while concurrently serving as research director at the Reason Foundation.

Lawrence holds an M.A. in international economics from American University in Washington, D.C., an M.S. and a B.S. in accounting from Western Governors University, and a B.A. in international relations from the University of North Carolina at Pembroke.  He lives in Las Vegas with his beautiful wife, Jenna, and their two kids, Carson Hayek and Sage Aynne.