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October 31, 2014

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J. Patrick Coolican:

Let’s reform the state’s tax policy that sticks it to the poor

J. Patrick Coolican

J. Patrick Coolican

We often hear critiques of Nevada’s tax system — that it is unstable and at the mercy of boom-and-bust cycles, that it relies too heavily on the tourism and development industries.

But we rarely hear about our tax system’s biggest problem: It’s regressive, meaning the poor pay a bigger portion of their income in taxes than the middle class, and the middle class pay more than the rich.

So I was heartened to hear former state Sen. Sheila Leslie emphasize this point in a speech Wednesday to the Progressive Leadership Alliance of Nevada in advance of Gov. Brian Sandoval’s State of the State address and the upcoming legislative session.

“What if we were to tax the rich as much as the poor in our state?” she said.

Indeed, according to a 2009 analysis released by the Institute on Taxation & Economic Policy, the richest 1 percent of Nevadans pay an effective state and local tax rate of 1.6 percent while the poorest 20 percent of Nevadans paid 8.9 percent.

The middle 60 percent pay 6.1 percent in state and local taxes.

Why does our tax system weigh down the backs of the middle class and the poor?

Because we rely heavily on the sales tax. It's the largest single revenue source for the general fund — and it is by definition regressive. A person who earns $500,000 per year, for instance, will spend only a small fraction on taxable goods. Their other money is either saved and invested or goes to pay for services, such as landscaping or private tutoring, which are not subject to sales taxes.

A poor person, by contrast, may make $15,000 and be forced to spend nearly all of it to survive, with much of the money spent on taxable goods. Hence the disparity.

A middle-class resident falls somewhere in the middle.

The injustice is exacerbated because the poorest children have less opportunity to rise into the middle class — once considered an inarguable plank of the social contract — because they often attend mediocre, underfunded schools.

A class war? You bet there is, and in Nevada, the rich are winning in a landslide.

Any Nevada tax reform proposal that doesn’t address this unjust disparity is not even worth discussing.

Of course, the easiest method for tax equity would be an income tax. If you don’t want the rich to pay more, fine; everybody could pay the same percentage of their income. A flat tax. Conservatives love this at the federal level, so why not here in Nevada?

In Nevada, however, the suggestion of an income tax tends to be treated like a ribeye at a convention of vegetarians. Still, it’s the best solution.

Barring that, Leslie recommended the next best thing: taxing corporations that are getting something pretty close to a free ride.

“Nevada is one of three states that do not tax corporate profits," she said. "What if these highly profitable mega-corporations paid a nominal percentage of their profits in taxes to Nevada like they do in other states?” A good question.

Of course, Nevada’s status as a tax haven for corporations has led to widespread prosperity here, right? Oh, guess not.

Leslie also advocated raising taxes on gold mining companies, which enjoy some of the most favorable tax treatment in the country, if not the world, on a nonrenewable resource that can only be found in a handful of places, including Nevada.

I often hear from lobbyists for mining companies and other corporate interests that these ideas wouldn’t really solve our revenue problem or amount to enough money to properly fund our schools. Perhaps, but so what? It would get us part of the way there, so it’s worth doing.

But again, let’s put aside the toxic question of tax increases and focus instead on tax fairness. Assume the same level of revenue. Why should the poor sacrifice more than the rich?

Sandoval has made it clear he has no intention of doing anything about the rank unfairness of our tax system.

I’ll be happily surprised if the Democrats offer a forceful alternative, but I wouldn’t count on it. They usually answer to the same masters.

In Leslie’s words, “Nothing is more powerful in Nevada than the gambling, mining and banking cabal of lobbying interests and their lawmaker friends ...”

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  1. Well the basic theme of Nevada taxes has been to tax the visitors to our casinos

    Compared to other states we get a disproportional amount of taxes off tourists

    Elimination of sales taxes will shift all the burden on to residences of Nevada - go figure

  2. Bob, get off your high horse. You and your fellow republicans have been singing that same old song every time tax increases are discussed. Not every person in the lower and middle classes are on public assistance and those that are, how many are actually abusing the system? Of course there will be exceptions, just as the rich abuse the system to escape from their legal obligation to pay their fair share. And don't tell me that they pay what they are legally obligated as it is the rich who lobby for the tax benefits that benefit no one but the wealthy. I bring up the special tax treatment of Steve Wynns art collection that was on display at one of his resorts. How many people benefit from that deduction? How many people benefit from a mortgage interest deduction on second homes? Need I say more? It's high time the rich pay their fair share AND follow the same rules applied to everyone, without special treatment.

  3. @Bob_Realist

    While the problem you mention does exist,what does it have to do with the subject of the article ?
    The taxation of the poor..

  4. Ha, ha, the jokes on us. The "poor," meaning those on government subsidies, aren't even spending their own money so, in reality, it costs them nothing out of pocket. The bleeding-hearts can't seem to find enough things to shed a tear over when it comes to "redistributing the wealth." Obviously, the state of NV is suffering from the same disease as Washington, DC: too much spending, not a lack of revenue. I was "poor" at one time (though not on the government dole) and I made ends meet until I increased my earnings. I have no doubt I am not unusual and that since most folks are not born with the proverbial "Silver Spoon" in their mouths, they, like I, worked hard, moved up and are all the better for it. That's something the leftists never enter into their Commie equation. They have this cockamamie attitude that the rest of us are dummies and cannot get through life without being dependent on them. To them I say: Shove it!

  5. I feel that the study if flawed.

    Using the same numbers as in the article.

    The person making $15,000 per year in theory is going to be spending most of their money on Housing, Food, Medical. All items that do not have a sales tax on them. How is the burden put on them when the expenditures they make are not taxed? They might find a way to buy a used car, once again not taxed.

    The person making $500.000 is not going to spend all of their money as stated. They save, invest for the future and are not a burden on our society. He might step up and buy that $75,000 car and the sales tax on that car alone is going to be more than most in this state will pay all year.

    You have to look at how the money is spent, not how much is earned to use this argument.

    The other arguments posted here hold true also. Who's money are the poor spending?

  6. Having an income tax will be more expensive for the poor. They will be taxed twice, as the sales tax will not be going away. I do not know of a state that has decreased sales taxes after instituting an income based tax system.

  7. You know who doesn't pay their "fair share" of taxes? The poor. Most of them don't pay any income tax. Yet they receive welfare, section 8 housing, free school meals, free medical, free Obama phones, etc. Who is it that actually funds those freebies.....the rest of us who work and pay much higher tax rates. How is that fair?

    There are also those who choose to work part time or for cash, so that they can continue with the freebies. Make a little bit more money and they risk losing some of the free government cheese.

    The simple solution is a flat tax. Everybody pays the same PERCENTAGE...no matter what it is. Nothing is more fair than that.

  8. The problem is that the poor are unable to support the rest in the style to which they have become accustomed.

  9. Enjoyed the article, Mr. Coolican.

    This is yet another in a long list of reasons why the voters of the Great State of Nevada need to flex their muscles in the voting booth.

    Don't give me this crap that Governor Sandoval is a "moderate" Republican. He isn't. If he had the majority of the rest of State Government as Tea/Republicans, you can bet your last bottom dollar he would go crazy. He would gladly turn Nevada into another Michigan, Ohio and Wisconsin combined. You would see personhood amendments, more taxes on the middle class to give more tax breaks to casinos/mining, closing down of any and all abortion clinics, the defunding of Planned Parenthood, arm all teachers with handguns, but take away the books, desks and pencils they need in order to learn, bust apart more unions (especially the teachers union), all out World War Women, and any and all efforts to get rid of the Affordable Care Act, Medicaid, Medicare and Social Security combined. If Governor Sandoval had a majority in the State Government, all of this and more would happen. And he would smile and laugh that he can stick it to us without our interference.

    He is a Governor that is stifled right now. And he knows it. If you look closely at his record, he pretty much just stays out of the public eye of Nevadans. But, there are exceptions. Any single time someone comes forth with something to make the mining interests pay a more fair share of taxes, BAM! He steps up and gives a speech in defense of not taxing them. EVERY SINGLE TIME. I say he still runs interference for his old job as a lobbyist for the lawyer firm Jones Vargas. This Governor thing is a sideline gig.

    The only way to fix any thing that Mr. Coolican is talking about in this article is to get out there and vote and get rid of this totally radical and extreme ideology that the entire Tea/Republican Party is hawking continually. You listen to their crapola, it will get Nevada nowhere.

  10. Everyone should pay their fair share of taxes. Everyone should have the same opportunities here but we do not. It is terribly one sided. The corporate sector always deflects blame on things like welfare or the Unions but the truth is it is just unequal and unfair to the non wealthy. The welfare system is broken. Like many agencies designed to help people it becomes riddled with loopholes that allow it to be taken advantage of and a complaint platform for the wealthy who use it as a excuse as to why the system is unbalanced.
    We wont fix the system that helps the poor stay poor because we would have to admit that there is also a system that helps the rich stay rich and we would have to fix that too. The conservative Republican corporate model is designed to take as much as possible from every place it can find and sink it's teeth into. Taxes are controlled by that very same corporate mentality. The poor don't control anything the middle class pays for it all and the wealthy make sure it stays that way.

  11. Disagree with the statement that the poor pay more in taxes. Most of the really poor live off of the middle class taxes. Sales taxes don't create a stable base and never have. You can't depend on consumers to spend what they don't have. Tourists that stay in these huge resorts and don't have to go any other place to spend money do not raise money for the state. No one wants an income tax. But the corporations in NV get a huge break by not paying taxes. Mining has stripped NV clean of its resources and does NOT pay it's fair share. With Sandoval in office they never will. Gaming pay their share? Not a chance. Banking is in the same category. And all of this tax favorable status has done nothing to get NV going. Our economy still stinks. Diversity is given the proverbial tongue but nothing is really being done to move away from what has always been. Fewer industries keep NV handcuffed to them. NV is a haven for the rich to make more and keep more and put the burden on those with less.

  12. <<The "poor," meaning those on government subsidies, aren't even spending their own money so, in reality, it costs them nothing out of pocket>>

    @Fink:
    How do you figure this one??? Where are your facts? Enlighten us. Or is this just what you think is happening because you don't know any better?

  13. Nevada's Lord and Master Sandoval is corporate mining's "gatekeeper" and a member in good standing with big corporate's government party where labels such as Republican/Democrat are only there to confuse those who let themselves be confused easily. All Gov. Sandoval's actions conform to the big corporate government party's vision of control and profits for a few at the top.

  14. Bob, and what about the increasing degradation in our demographics? More and more illegals are seeking sanctuary in Nevada as Arizona and elsewhere says NOT HERE. We're getting more and more large families that use the government support system as a way of life and more keep moving here. I would think that the State and metro areas would want to attract Snow Birds and retirees--the people who can afford houses and condos designed with aging gracefully in mind. (LARGE bathrooms, no double sinks, walk in tubs, large showers, back yards, garages, one story buildings, close to bus lines and groceries.) Instead we denigrate those who have worked and worked, paid and paid, in favor of those who want and want and need and need without every working.

  15. I dare the writer and all his loony followers to checkout a Walmart in a low income neighborhood, the first weekend of the month. Stand there and count how many people use EBT/Welfare cards versus who uses a Bank card.

    Than come back and tell me the majority of people making under $15K are NOT feeding from the Obama trough. They are. Thus they are not paying higher taxes. because its NOT money they earned. It's my tax money being spent by others.

  16. Here a tax, there a tax everywhere yet another tax on tax. Taxes are on everything, clothes, vehicles, gasoline, homes, income, TV, telephone, internet and utilities. If those of your persuasion don't like a tax you hire a lobbyist to negate that tax. Then this becomes a redistribution tax, everyone else makes up the difference. Perhaps the tax base doesn't need expansion as much as it needs modification. We can't tax our way to prosperity but taxing and spending appropriately on quality education will secure everyone's future. I fail to understand why we don't target the millennium scholarship funds more toward what we need, health care professionals for example. Those accepting full ride scholarships for advance degrees would be required to stay here and practice their profession or pay back the money.

    Some politicians seem to believe that social behavior can be altered by selective taxing and other seem to think that paying no tax is best for society. It is musical chairs and its time to stop the music,take note, and make some real sense out of how we tax. Taxes are necessary in order to provide the infrastructure society needs to be productive. Today our system is broken. If it isn't realigned we may eventually have more tax collectors, lobbyists and tax consultants than taxpayers.

    One overriding truth about state and local taxes is that 99.99 percent of us pay property taxes. Whether you live in a home or an apartment you ultimately pay property tax. If you own a business property or lease you're the ultimate property tax payer. It defies common sense as to why government needs to have a hundred ways to collect taxes. A consolidated tax collection system makes sense. Taxpayers can see how much in total they are paying in taxes while the cost of tax collection and evasion is significantly reduced. This system also allows taxpayers to better focus upon where and how their taxes are being spent. Just as today, taxes would be apportioned according to the taxpayers lifestyle and/or business endeavor.

    Our elected officials will vehemently object to moving to a near singular tax system primarily based upon property taxes. They will point to the extreme downturn in property values and the loss of tax revenue. But here in Nevada this was ultimately their fault. They didn't foresee the need to have a larger rainy day fund nor did they cap the reduction of residential property taxes at 3% annually just as they did the increase. About the only other taxes that make sense are those special taxes imposed upon gaming, tourism, mineral extraction and transportation fuels. Fat chance any of this will happen. It takes political courage and that's rare given that votes and campaign contributions negate courage 99 out of 100 times.

  17. Las Vegas has changed. Once we were a unique opportunity to experience casino gambling at an has oasis in the desert. Now we offer the shared experience of 2 million people crammed into one drought stricken valley.

    Nevada hasn't changed so much. We still have a Legislature that meets for 120 days in odd-numbered (or maybe it's just numb) years and searches for its brains, heart, and courage while the men from gaming, mining, and corporations stand behind the curtain and pull the levers of power.

  18. Rely on welfare for decades: the Moms who "raise" those pictured in the headlines for major crimes eventually age-out cause they reach a point where they can't get pregnant. Then, they can "raise" their grand kids, foster kids, adopted kids and get media attention for "caring" for the abandoned. While they have kids in the household they get EVERYTHING covered. SSI and SSDI are used. Lawsuits and claims.... Then there is always the option of being in so much "pain" that they get MEDICAID-funded nursing home care. The SAME INDIVIDUALS are ABUSING THE PROGRAMS their entire lives. Anyone want to explore how few of the welfare moms learned to read and write? Anyone want to explain how many ever had stable relationships--something other than conning a man (or woman) into supporting her because she's having his baby. WHEN will parents and teachers explain to pre-pubescent girls that you don't get a loving long-term relationship by weighting down someone else with crying babies? Maybe looking for a partnership where both adults support (financially, emotionally, otherwise) each other. Show yourself that you can support yourself. And then impress your would-be significant other that you have a proven record of self reliance and can be depended upon to help him out. That'll attract "better" partners than anything else.

  19. This man is a dangerous Maoist and must, for the sake of our Republic, be stopped from spreading his toxic Marxist-Leninist ideology!

  20. Motor Sports: I've been employed in the government programs and KNOW that many "WANT" to be on welfare--or perhaps we should spare semantics and explain that they don't realize they have any other options--because many didn't learn to read and write in K-12, many didn't see or here how you find or hold a job, how to live on low-income by finding a room mate. K-12 is just not responsive to the needs of self-reliant life styles and working your way up the employment later without having kids in your teen years. (Thank you, Spock.) We must INSIST that teens and young adults make their own way without government programs to fund ever "option." What about the options they find and can do?

  21. Comment removed by moderator. In response to a removed comment.

  22. I repeatedly point out that individuals often take the easy way out instead of paying the dues toward a successful career, successful employment. They don't do homework. They drop out of school. They rely on government, church, private welfare. They get pregnant as teens without considering the impact on THEIR lives. I'm suggesting that NOT providing easy options for the short term means that INDIVIDUALS must be self reliant and concerned about their long term. Many seem to think Mom and Dad will take care of me. When the parents are maxed out, the individuals turn to other relatives, friends, strangers, Craig's List, social welfare, churches, non-profits....anything but taking care of it themselves. It is NOT helping someone by giving them free anything. If they are not willing to pay a price, some price, it is of no value to them. Think furniture, food, a job, health care, housing. Barter is wonderful but you gotta be willing to work / pay for what you want.