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October 31, 2014

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Sun Editorial:

Time for a solution

Overhaul of tax system needs to be at center of legislative debate

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Assembly Speaker Marilyn Kirkpatrick said she would start an “open and frank discussion” about taxes on Day 2 of the 2013 Legislature, and she fulfilled that promise. Lawmakers took their first stab at the issue Tuesday.

But that’s only the start of the discussion. Kirkpatrick expects to take on the state’s antiquated tax structure. Given the typical political antipathy toward taxes, this is a gutsy move, but the state tax code desperately needs an overhaul.

There’s an inherent inequity in the system, notably the state’s reliance on regressive taxes. And the tax burden is borne by a few industries. That has led to volatile swings in state revenue that have hurt already underfunded public services.

Not that this is news. A stream of reports and studies over the past four decades have reached similar conclusions. A 1979 report, for example, expressed concern that tax revenues were declining because they were “not sufficiently responsive to population growth or inflation.” The report recommended restructuring the tax system to better handle the growth and meet the state’s needs.

The problems are clear, but the political will has been lacking. Instead of dealing with the real problems, the Legislature has, time and again, resorted to scores of incremental fixes and then pushed the bigger issues off by asking legislative committees, analysts and blue-ribbon panels to once again study the issue. Interest groups have filled the leadership void and tried to add or repeal levies via the initiative process, but that is a poor way to make tax policy.

This has been the cycle for years. Lawmakers keep avoiding the hard decisions in favor of kicking the proverbial can down the road. In her opening speech to the Assembly, Kirkpatrick put the situation in blunt terms.

“Will we be a state that continues to apply nickel-size solutions to dollar-size problems, or will we finally recognize that we just can’t balance our state on the backs of just a few industries?” she asked.

That’s the critical question of the session: Will lawmakers rise to the task?

Politically, it’s better to avoid the issue and the risk of being labeled as a tax-and-spender. Especially in Nevada, which for nearly 100 years has identified and sold itself by its low taxes. There’s no income tax, and many businesses pay virtually no taxes.

National studies have shown that Nevada’s per-capita taxation is below average, but those figures don’t tell the whole story because they don’t take into account the taxes from tourism. A 2008 study by Applied Analysis conservatively estimated that tourists to Las Vegas paid $1.6 billion in state and local taxes. The report said that tourists, who don’t require the same level of services as residents, have “helped Nevada preserve among the nation’s lowest personal and business tax burdens.”

The resulting low taxes have meant a lower level of services and quality of life for those of us who live here.

Talk of reforming the tax system has undoubtedly sent shivers through some politicians, but Kirkpatrick isn’t talking about raising more tax money. Although she hasn’t offered many specifics, she has talked about a “revenue-neutral” approach that would broaden the tax base and lay the groundwork for a more stable system.

So far, some liberals have bristled at the lack of new revenue, and some conservatives have expressed a willingness to discuss such a plan.

The political reality is that a revenue-neutral plan has the best chance of succeeding. It takes two-thirds of the Legislature to pass a new tax, so any legislation will need Republican support. And a revenue-neutral plan will be the only type that has a chance to pass muster with Gov. Brian Sandoval.

The task won’t be easy, but if Nevada is to have any sort of stability in the near future, it’s going to take tough decisions like this — and lawmakers are going to need to find more than a nickel’s worth of political will.

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  1. If this does not pass a second time and sent to the voters then anything said about correcting our tax structure is pure BS!

    http://www.leg.state.nv.us/Session/76th2...

  2. There is no income tax and might I say, for a good reason. If you look at most states with income taxes, most are in debt or have budget shortfalls. The difference is that they spent all the money that came in like there was no tomorrow. The same would happen in Nevada. Within a short period of time Nevada politicians would be claiming a shortfall and that more money is needed. There is problems right now, one being the arbitration requirements when local governments don't bow down to union demands. As for the state, the politicians should consider changing the constitution where it protects the mining industry from taxes. A fairer tax on the mining industry would bring much needed money to the state. It is time that government live like the people within it. If the economy is bad, government will need to cut, not add taxes just to keep the status quo.

  3. Nevada Lawmakers have avoided tax/revenue changes to the Nevada Constitution. For well over 100 years, for example, the MINING industry has enjoyed paying a pittance in taxes to Nevada while extracting Nevada's wealth from the soil and sending it out of state. Suggested solution: require MINING to pay at the very least, an average in tax rates that it pays to the other 49 states in the USA. That is FAIR.

    Also, Lawmakers need to have the courage to address education meaningfully: put ENforcement teeth in the taxpayer funded and administered, "PARENT/TEACHER/STUDENT INVOLVEMENT ACCORD". Last Nevada Legislative Session, Lawmakers only addressed teachers and administrators, by requiring the new evaluation. But they fell short in dealing with the ROOT of the problem: the behaviors of the students and parent/caregivers. Let's finish the job, and be fair to those who are dedicated in their labors in our schools.

    The economic crisis of 2008 has pressed Nevada to change and do things differently. The striken state is still recovering. Nevada will NOT attract new business as long as it avoids supporting education in a meaningful and effective way.

    The future of Nevada rests in our young people. The floods of people entering Nevada has impacted Nevada's infrastructure. Many of these people lack good educations themselves, as well as proper parenting skills. Education is in a crisis mode, as we cannot avoid the elephant in the room, folks.

    "Time for a solution," is long past due. Now that many of the old guard, old school, are no longer in office, just maybe, these new, freshman Lawmakers, will serve the People of Nevada, rather than just the industries that line their pockets and campaign coffers. I pray they have the courage to not continue "kicking the can down the political road."

    Blessings and Peace,
    Star

  4. I can only imagine what misguided attempts at "overhauling" our tax system will mean to business in Nevada. Why, we don't have to look further than next door at the dismal state of business in California, where nobody I know would ever want to launch anything given the bureacracy, regulation and taxation. Will those proposing changes have the guts to present the truth, that raising taxes equals rising prices and an increased cost of living? To what end? So that more can live here, poorly? Taxing-and-spending is no rising tide theory, it is the sinking boat theory: We all go down together!

  5. Let's clear the air: it's NOT a revenue problem. We have thousands more dependent on government--illegals stealing K-12 and social welfare benefits--with no corresponding productivity. More than 12% of employees are illegals--search this web cite and see. The Dads take the jobs, sure, many lower level jobs. The Moms network on their iphones to see which food bank is giving the most of what away today--they drive on over in their Cadillac Escalades. However, refining our SUT system and process for the first time would be a good think: CHANGE THE FORMULA. The general fund needs more--to fund essential programs including DSA. Cities and Counties should get less--they get enough to overcompensate city and county employees so much so. The Nevada Tax Commission has "ruled" that many things are exempt from tax--fix that. Appeals Officers have given away the farm to businesses perhaps affiliated with politicians campaign funding--so now there are many things that Dpt of Tax cannot stand on--those businesses will keep failing to report betting they can avoid any audit assessment via an appeal. FIX THAT. Expanding the interpretation that "fabrication" labor includes vehicle repairs would broaden the tax base. Ditto hair cuts and all personal grooming: you pay $500 for a hair cut, you can afford it. You pay $12 for a haircut, the shop can do "tax included" and charge $13.

  6. Tax rates have remained what they are. There is no such thing as a "stable" revenue base. When sales are down, revenue is down. The same holds true of any and every tax devised. That said, why is it that government cannot provide essential services at reasonable cost with the SAME revenue RATE they did before. Time was when ALL government was 20% of GNP. Now it's exceeding 35% of GDP--local, state and federal. Many new programs might be "nice" to give away tax revenue to those who won't or can't earn their own way but each time we increase funding we must DECREASE something else. Competing priorities are a fact of life but no one can fund everything everybody wants.

  7. The chain of command; We take our wishes to Legislators who we've forced to run our requests by their significant campaign contributors in hopes that not only will our needs not confict with theirs but that they'll hold any interest at all in allowing THEIR Legislators working on the needs of others. You get what you pay for!

  8. People come here for low taxes and personal freedom and immediately attempt to usurp both.

  9. The long, ongoing discussion of Nevada needing new taxes is not compelling because there's no clear benefit given as justification. It's just "we need more money" for this or that. It seems that the process should be first to explain how the additional tax revenue will be used and how it will benefit the state and then ask for the taxes to pay for it. Given the lack of confidence many people have about how wisely government uses tax money, it's not surprising that people don't want to increase revenue without first being sold on what the benefit will be. Education is a good example. I recognize that it would benefit Nevada to have better public education. I see that a new tax is being considered to improve funding, but I haven't seen anyone lay out clearly how the money will be spent or what benefit we can expect for the additional cost in terms of improved educational outcomes. If I thought additional tax revenue for education would be used effectively, I'd be much more open to higher taxes to pay for it. Unfortunately, with no information about how the money would be spent, I have no confidence in that happening, so why throw more money at it?

  10. Thank goodness that Harvey Munford is no longer on the taxation committee. I don't understand why voters keep returning him to office. His proposals, along with others lacking serious thought, rarely go anywhere and are one reason many people are beginning to refer to Nevada as a failed state. Keep in mind our legislature's makeup is not unlike many other states. Ultimately many of these people elected to office locally will some day move on to Washington. Then when we complain about their inability to conduct the nation's business we can only blame ourselves for initiating the problem.

  11. Given that the legislature only meets for 120 days every two years one cannot expect any great tax or other creative in-depth legislation from this body of elected officials. They rely primarily upon input from others such as lobbyists or citizens with an axe to grind. It isn't all that much different than Congress in that the Senate only meets for about three days per week and half the time they are either commenting home or attending breakfast fundraisers. One way to have our elected representative's focus is to have them telecommute i.e. video conference. In this day and age staff can be co-located in their geographic jurisdiction. Any necessary on-site face to face time can be done one week every month. That said, it's time for a full time deliberative body not part timers armed with band-aids.