Las Vegas Sun

November 30, 2015

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J. Patrick Coolican:

Where are the Democrats in extracting more taxes from the mining industry?



Nevada, the Silver State, is also a major producer of gold, which is selling for around $1,600 per ounce in March 2013.

J. Patrick Coolican

J. Patrick Coolican

The surprise move this week by Nevada Senate Republicans calling for a mining tax increase as an alternative to the business margins tax offered up some fascinating political theater and intriguing questions.

My first one, and I’m hardly alone, was this: Where the heck were the Democrats? I think I know where they were — they were tallying up campaign money from rich mining interests. I’ll get back to that in a minute, but first, quick background:

The state’s gold mining companies, which have been raking in big revenue in Nevada in recent years to supply world demand for the shiny commodity, enjoy a highly favorable tax and regulatory environment in Nevada.

Our state constitution provides a privileged place for mining, allowing a 5 percent tax on net proceeds of the mines. This allows mining companies to deduct significant expenses before they pay the levy on this nonrenewable resource. (Like other companies, mining firms also pay property, sales and modified business tax.)

Despite the gauzy TV ads you may have seen recently from the Nevada Mining Association, when we talk about mining in Nevada, we’re talking almost exclusively about gold. Furthermore, we’re talking about two companies, Barrick and Newmont Mining Corp., which mine here in Nevada but whose corporate headquarters are in Toronto and Denver, respectively.

For comparison’s sake, other states tax their most valuable commodities — Alaskan oil and Wyoming coal, for instance — at far higher rates than we tax our gold mining companies.

To rectify the situation during the state government fiscal crisis in 2011, state Sens. Sheila Leslie and Steven Horsford pushed Senate Joint Resolution 15, which would eliminate the constitutional provision on mining.

It passed the Senate and the Assembly in 2011. If it passes both houses again this year, it goes to the voters in 2014.

Strangely, however, Democrats have so far been sitting on their hands and mum on their plans to introduce the measure this session, even as many of them sought an alternative to the business margins tax that the teachers union qualified for the 2014 ballot.

This was foolish on the part of the Democrats, as a mining tax hike enjoys widespread public support in the place where elections are won and lost — Southern Nevada, which derives very little benefit from the gold mining business. (In Nevada, the simple rule is that voters are always in favor of taxes on someone else.)

And now the Republicans, led by state Senate Minority Leader Michael Roberson, have beat the Democrats to the punch.

So, again, where were the Democrats?

On a hunch, I checked their campaign finance reports.

Sure enough, of the nearly $1 million that Barrick, Newmont and the Nevada Mining Association spent this past election cycle on state races, much of it was on Democrats.

Barrick gave $10,000 to Nevada Senate Democrats, plus $2,500 to Majority Leader Mo Denis. Newmont gave $50,000 to the state Democratic Party, plus $5,000 to Denis and $17,500 to his political action committee. Kelvin Atkinson received $10,000 from the industry. Assembly Majority Leader William Horne received $13,500. Speaker Marilyn Kirkpatrick and just about every other Democratic member of the Assembly, except for the ever-pure Peggy Pierce, received industry money.

Odd that. The only gold found in their districts is in pawn and jewelry shops.

Why the industry gave so much to Democrats isn’t surprising — there are more Democrats than Republicans in the Legislature, and special interests usually sidle up to whomever is already in power.

And the industry has smartly recognized that urban Democrats are their key vulnerability. After all, for the Democrats’ constituents, the gold is mined so far away it may as well be the moon. And the Democratic base is smart enough to know that with gold hovering near $1,600 an ounce, a small tax hike on mining companies will have next to no effect on the industry because this is where the gold is!

But for years, most Democratic elected officials have sold out their base on the mining issue, happy to take a campaign check and to listen, often over a glass of wine, to the tendentious arguments of the capital’s bevy of mining lobbyists — there are more mining lobbyists than state senators.

And, so, Roberson saw an opening, and he took it. The beauty of it all is that Roberson and his Republican colleagues have also received their share of mining money. In fact, state Sen. Greg Brower probably owes his election to the industry. So, now they can tell the voters that they aren’t influenced by money, unlike, you know, some people. It’s genius.

CORRECTION: Photo caption updated to show that gold is not selling at record high prices. | (March 10, 2013)

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