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April 25, 2015

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Time to end mining’s sweetheart deal

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Sheila Leslie

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Every Nevadan knows the truth about our boom-and-bust gold mining heritage. When the gold is gone, the multinational mining corporations will decamp for untapped veins elsewhere, leaving behind ghost towns of unemployed people, mercury in our fish and a realization that once again, the profits from our nonrenewable resource are gone forever.

In an effort to right this historic wrong, Senate Joint Resolution 15 was sponsored by the Senate’s Revenue Committee in the 2011 session. As the chair of that committee, I held a frustrating series of hearings as it became increasingly clear that the mining industry has been reaping billions from our gold mines while leaving a pittance behind as their contribution to the state’s general fund. In fiscal year 2011-12, a year when the price of gold continued to soar, Nevada’s gold mines produced $8.76 billion in gold and paid $104 million to the state’s general fund under the special Net Proceeds of Minerals (NPOM) tax, an effective tax rate of 1 percent.

Since Nevada’s inception, when mining forced the state’s original constitution to be rewritten in its favor, the industry has enjoyed a privileged status through taxing provisions written into the constitution to protect shareholders’ profits. Over the past century, the industry has employed legions of high-paid lawyers and lobbyists to ensure these protections remain enshrined in the constitution while taking unbelievable liberties in the often overlooked regulatory process, taking advantage of every possible deduction, sometimes without statutory authority.

After a hard-fought and sometimes bitter battle, led by then-Senate Majority Leader Steven Horsford, the 2011 Legislature reduced some of these deductions. No longer can the industry deduct its dues to the World Gold Council, an industry marketing organization. Mining companies cannot “double dip” by deducting the cost of their employees’ health care from both the NPOM and the Modified Business Tax. Out-of-state development costs are also no longer allowed to be deducted from Nevada taxes.

Although the industry insists the NPOM tax is a property tax, it actually performs like an income tax, allowing for so many deductions that some mines end up paying nothing in NPOM taxes. Zero. You won’t see that fact in the “feel-good” advertising that is ubiquitous these days throughout the state. However, you won’t find the ads on KSNV-TV Channel 3, which ran a series of stories that irked the mining barons. With station owner Jim Rogers standing by the series, the mining industry pulled its ads.

The Revenue Committee realized last session there is no hope of renegotiating how mining is taxed in Nevada unless the special provision protecting the industry is removed from the constitution. The committee reviewed how other states tax mining, through severance taxes or excise taxes, mechanisms unavailable to Nevada due to our constitution’s prohibition.

That’s why the committee sponsored SJR15 to start the process of eliminating mining’s sweetheart tax deal. The resolution passed the state Senate on a 13-8 vote, with two Republican senators voting with all the Democrats.

Yet the resolution stalled in the state Assembly, under the pressure of the lobbying corps, which worked overtime behind closed doors to kill it despite their official “neutral” stand. In the end, SJR15 passed on the last day of the session, on a 27-15 vote, with no Republican support.

In the intervening two years, the Nevada Mining Association has conducted a one-on-one misinformation campaign to convince legislators that the measure would actually reduce the industry’s taxes, despite extremely clear testimony by the legislative counsel that this was not the case.

The industry also continued to whine about being targeted for increased taxation while forgetting to mention it is the only industry protected from a change in taxation by the state constitution.

But the house of cards began crumbling last week when a majority of the Senate Republican caucus declared its intent to vote for the resolution, citing arguments long made by progressives about the patent unfairness of single-industry tax protection and the gross underpayment for our state’s golden treasure.

If the mining industry cannot effectively deploy its head-spinning reasoning to confuse the 2013 Legislature or maximize the constant threat to take mining elsewhere, the measure will go to the ballot, where the people will decide whether it’s time for Nevadans to get their share of the gold before this boom cycle bottoms out.

Our state has tremendous needs to improve funding of education, mental health care, and services for our children and seniors. Don’t we deserve a little more of our own treasure?

Sheila Leslie is a former Democratic member of the state Senate. She lives in Reno.

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  1. The mining industry and precious metals have been in a market rise for the last decade. Gold prices going from $250 to $1700 an ounce. Making mining more possible and profitable. It's past the right time to pay more taxes on the gains and profits.


  2. I agree with Carmine. The Nevada State Constitution is nearing 150 years old and we're still bowing to the power of the 1864 Mining Interests of Virginia City.

  3. Like the Federal Income Tax, the mining tax code needs to be simplified so that the legions of lawyers and accountants can't find ways not to pay their fair share.

  4. Isn't it also about time to STOP ELECTING people who keep promising to spend more? Every body has needs. Doesn't mean we should expect government to take care of all our needs. Sure, "education" can spend our entire GDP as can many "talented" shoppers. We need elected officials who comprehend what COST EFFECTIVE means AND what the ESSENTIAL FUNCTIONS of government are.

  5. @Roberta....from may posts on many threads we know what you don't like and what you don't support in the way of government.taxpayer expenditures. So what do you like? What do you believe is a proper government function and how should it be funded?

  6. Thank YOU, Sheila Leslie and those Lawmakers who are making MINING accountable to the People of Nevada!

    This is only a beginning.

    MINING needs to pay its FAIR share to Nevada and its People. Even by paying an average of what it pays the other 49 states, would be far more than the pittance it pays now!

    Blessings and Peace,

  7. "Since Nevada's inception, when mining forced the state's original constitution to be rewritten in its favor. . . . ."

    Leslie -- you misrepresented both mining and our Constitution. That industry forced nothing on anybody. Constitutions must be ratified by We the people before they become Constitutions.

    Overall the industry greed you villify here is matched only by government greed for more revenue. Either way there never seems to be enough, except industries are productive and create real jobs.

    "Isn't it also about time to STOP ELECTING people who keep promising to spend more?"

    Roselenda -- excellent post!

    "What do you believe is a proper government function and how should it be funded?"

    wharfrat -- it's all in our Constitution. Ever bothered to read it?

    Government must get much smaller before We the people can thrive!

    "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically." -- Henry David Thoreau 1849 "On the Duty of Civil Disobedience"

  8. Here is another person that needs to pack their carpet bag and return to whence they came. If she wants high taxes then she can go back to California, LEAVE NEVADA ALONE.

  9. Only when they bring the corruption of that place with them.

  10. @KillerB...yeah, I've read it a couple of times....and written about various aspects....and published...and started [but never finished] a thesis on effects of international law. Unless you are one of those deluded "originalists" then you know quite well that SCOTUS interprets the Constitution not only in light of original thinking, but also on the basis of Congressional action and political/cultural/economic forces. How, for example, has the Commerce clause been interpreted over the years? I think that it is perfectly legitimate to ask a consistent naysayer on the issue of government function exactly what he/she believes is a legitimate function. Note the absence of replies with content.

  11. "Unless you are one of those deluded "originalists" then you know quite well that SCOTUS interprets the Constitution..."

    wharfrat -- then you haven't read it. Neither the federal Constitution nor your "SCOTUS" has nothing to do with the bits about mining in our NEVADA Constitution.

    And be careful how you use "originalist." When the paramount law of this state and country says something plainly what else is there besides billable hours for the suits?

    "...a power over a man's subsistence amounts to a power over his will." -- Alexander Hamilton, Federalist Paper 79, 1787-88

  12. A true 'originalist' interpretation of the US Constitution would also require about half free, half slave states and nullifying a women's right to vote. With the originalist interpretation, slaves could be brought into free states with their owner, just as a person has the right to bring and own their property in free states.

    This originalist view of the Constitution was supported by the US Supreme Court in the Dred Scott decision, a verdict that has never been overturned to this day. Scalia's recent opinions on 'racial entitlement' infer that the elements and core philosophies of the Dred Scott decision stand a chance of being re-invigorated.