Unions to seek initiative for business profits tax

By David McGrath Schwartz

Tuesday, June 5, 2012 | 1:23 p.m.

The state’s teachers and labor unions will file a business profits tax initiative Wednesday, said Danny Thompson, head of the state’s AFL-CIO.

The tax would be on business’ net profits of more than $1 million a year, at a rate of 2 percent. Thompson offered a rough estimate that it would raise $1 billion every two years, a massive sum for a state with a general fund budget of about $5.5 billion for two years.

“Our tax system is broken,” he said. “If we don’t fix it, we’ll never fix our educational system. If we don’t fix our educational system, we can never diversify our economy.”

The money will be earmarked for kindergarten through 12th grade education.

Although the group supports phasing out the state’s tax on payroll, called the modified business tax, it will not be part of the initiative.

The group will have until November to collect more than 72,352 valid signatures. If successful, the proposed language will go to the 2013 Legislature, where lawmakers will have 40 days to pass it, reject it or offer an alternative to voters. If it’s not passed, the initiative would go on the ballot in 2014.

The initiative is sure to be opposed by conservatives and business groups, who have guarded Nevada’s status of only one of three states without a personal or corporate income tax.

Gov. Brian Sandoval, a Republican, has said he opposes using the ballot to enact policy changes.

A tax initiative has been discussed since the summer of 2011, when pro-tax forces were frustrated by the Legislative process. But a coalition has been hampered by disagreements about language and ambivalence from potential private industry backers, like gaming and mining.

Thompson said that the coalition is still evolving.

“People want to see it, see that it is going forward,” Thompson said. “Until that happens, it’s just talk. Tomorrow, it is more than talk.”