Tax Foundation study shows Nevada is not a ‘low-tax’ state

Victor Joecks

The Tax Foundation has just released in its annual report comparing the tax burden in the 50 states. The study ranks Nevada 28th in terms of state and local tax collections and 49th in terms of tax burden.

Leftists in the Legislature are already trying to use Nevada's tax burden ranking of 49th as proof that Nevada doesn't have enough tax money and that this is the cause of Nevada's budget problems.

Nothing could be further from the truth, and even a cursory reading of the Tax Foundation's study (specifically, page 11) destroys the myth that Nevada is a low-tax state in terms of per-capita tax collections.

As my colleague Geoffrey Lawrence explained today:

Already some Nevada leftists are pointing to the Tax Foundation's new report as "proof" that Nevada's budget problems are the result of having the country's second-lowest tax burden. The Tax Foundation report, however, makes a clear distinction between a state's tax burden and its tax collections.

The "tax burden" ranking measures the percentage of income that state residents pay directly in state and local taxes, which, in the case of Nevada, excludes all the money the state collects from taxes assessed on the tourism industry.

However, when it comes to combined state and local tax collections – how much money government actually has to spend – the Tax Foundation finds that Nevada ranked 28th-highest in the country for Fiscal Year 2009. Further, this ranking actually understates the current level of tax collections, because it does not include any revenues resulting from the largest tax increase in Nevada's history, which was passed by the 2009 legislature and impacted tax revenues in Fiscal Years 2010 and 2011.

To claim that this report shows Nevada doesn't collect enough in tax dollars is to misrepresent the report's clear findings. This report actually shows that Nevada is near the median of states when it comes to state and local tax collections – even before taking into account the largest tax increase in Nevada's history.

This study shows clearly that Nevada's budget problems are not the result of a lack of tax revenue. As the Nevada Policy Research Institute has highlighted repeatedly, the relatively low quality of K-12 education and other services in Nevada has resulted not from a lack of funding, but rather from poorly designed policies. …

Regardless of who bears the burden of taxes, lawmakers still have the money to spend. Not including the largest tax hike in Nevada's history, the Tax Foundation report still shows that Nevada has more money to spend per capita than 22 other states.

As this report proves, in terms of tax collections, Nevada is not a "low-tax" state.

More proof that Nevada has a spending, not a revenue, problem.