Nevada’s taxing problem

Sunday, Feb. 13, 2011 | 2:01 a.m.

The Nevada Legislature’s committees assigned to look at the state’s tax structure started work last week, studying possible ways to mend a broken system. They have a well-worn path to follow — the state has been through several major studies of the tax system, and all have concluded that it needs to be broadened.

The question is whether they will be able to break any ground toward actually fixing it. Despite all the studies, the Legislature hasn’t had the political will in the past to address the fundamental problems. But, as Anjeanette Damon reported in the Las Vegas Sun on Wednesday, the committee leadership pledges to take on the “T-word” — taxes.

“We want to really look at the tax system we have in the state,” said Sen. Sheila Leslie, D-Reno, chairwoman of the Senate Revenue Committee. “It’s not news to anyone that our state is facing structural deficits, cyclical deficits. It’s time to take out the unpredictability in our system and establish a tax structure that really is ready for the 21st century.”

The Legislature, which is controlled by Democrats, will need more than political will — it will need bipartisan support. Any fix in the system would likely mean some sort of tax increase, and two-thirds of the lawmakers would be required to pass it. Republicans have enough votes in both the Senate and the Assembly to block a tax bill. As well, anything that raises taxes will run into Republican Gov. Brian Sandoval and his no-new-taxes pledge.

That could mean a stalemate, which would lead the state down the road of least resistance — massive budget cuts — harming education and other vital services. As David McGrath Schwartz reported in Wednesday’s Sun, if the Legislature won’t address the problem, there are others who might. Lynn Warne, president of the Nevada State Education Association, said although there were no formal proposals, the union has talked to business leaders and others about an initiative petition.

Jim Richardson, a lobbyist for the Nevada Faculty Alliance, which represents higher education faculty, said, “If the political leadership can’t straighten out our tax structure, then groups will coalesce to take it to the people.”

An initiative is a terrible way to create tax policy. Initiatives can be pushed by deep-pocketed special interests that run sophisticated campaigns to push their positions. Tax policy is complex and can have long-standing consequences, and that doesn’t translate well to a simple yes-or-no ballot question.

That would be a tragic mistake. Nevada doesn’t need any more bad tax policy — it needs well-reasoned plans that will help the state provide good schools, law enforcement and infrastructure.

The Legislature will face opposition from the anti-government, anti-tax crowd. But the issue is more fundamental than raising taxes. It’s about fixing a system that is fundamentally unfair.

There are many businesses that go virtually untaxed, and the mining industry enjoys antiquated protection written into the state constitution. The tax system certainly doesn’t reflect modern Nevada, and it hinges on two taxes — gaming and sales — that can fluctuate wildly. That has left the state without a reliable, let alone reasonable, source of revenue to fund education, infrastructure and other needed services.

The Legislature has had years to consider the state’s tax policy and failed to make the needed fixes. Nevada needs a mature and reasonable debate about taxes, and the proper place for that is in the Legislature, not at the polls. Lawmakers need to find the political will to fix a long-standing problem.