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July 3, 2015

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Memo from Carson City:

Mining isn’t the only industry with constitutional tax protections


Steve Marcus

Miners set off a blast at the PABCO Gypsum mine near Lake Mead during an earth science workshop for teachers Wednesday, April 4, 2012. The workshops are sponsored by the Nevada Mining Association and the Nevada Division of Minerals.

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Mining should pay its fair share, say critics who want to remove the industry’s separate and special constitutional tax rate.

Gold prices are high, but the state’s mining industry pays a constitutionally capped tax rate, and the state allows the industry billions of dollars in tax deductions before paying a 5 percent rate.

No matter the price of gold and no matter how much of it mining companies take out of Nevada, its tax rate remains the same because of that exemption in the constitution. Lawmakers who would like to collect more from the industry say their hands are tied.

Who else could accomplish such an ironclad protection but the mining industry with its legions of lobbyists at the Legislature who peddle influence and cram campaign coffers full of cash?

Well, there’s the financial industry and banks, retailers and other businesses with inventories, and homeowners.

They've not only won special tax provisions in the constitution; they won total exemptions from taxation.

And for good reason, banking and retail representatives say.

In the 1970s, Nevadans decided retailers shouldn’t be taxed on their inventories, which had been taxed since statehood. The repeal measure passed the two legislative sessions required to amend the constitution. The retailers started a "Whack a Tax" campaign and persuaded voters to approve the proposal during the 1978 election.

“The rationale on this inventory exemption was that there were certain items kept for years and years that were taxed again and again,” said Carole Vilardo, former co-chairwoman of the Nevada Committee to Repeal the Inventory Tax and current executive director of the Nevada Taxpayers Association.

Retailers won an exemption that they do not enjoy in seven other states to this day, and it kept Nevada competitive with California, which also eliminated its inventory tax in the 1970s.

The constitution now says “inventories are exempt from taxation. The Legislature may exempt any other personal property, including livestock.” (And, yes, the Legislature chose to exempt livestock from taxation.)

Bankers and the financial sector also hold constitutional tax exemptions.

Nevada cannot impose a tax on bonds, shares of stock, securities and other financial devices.

“These are things that represent investments or obligations somebody undertakes,” said Bill Uffelman, president of the Nevada Bankers Association. “It’s not income to me. It represents my share of that.”

The tax exemption prevents Nevada from levying a shares tax as other states do, Uffelman said.

It might be relevant to today’s mining debate, however, that lawmakers found a way to charge banks more despite that constitutional protection. In 2003, they levied a higher payroll tax rate on banks than on other businesses.

In 1982, Nevadans also enshrined in the constitution a protection from taxation for their furniture and household goods. (Personal property kept outside the house such as boats and campers, is also exempt.)

Fast forward a few decades, and the Nevada Legislature will hold a hearing Tuesday about a resolution removing the mining industry’s separate and special constitutional tax rate.

The tax rate could get chopped out of the constitution, allowing legislators to raise mining taxes so that, as critics say, the mining industry can finally pay its fair share.

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  1. Mining corporations in Nevada enjoy far more than just tax protections here in Nevada,

    File a timely formal complaint w/MSHA or NV MSATS for safety health or harassment violations in Nevada's Mining Industry and watch how fast NV Dept of Business and Industry hacks work their blackmagic as it gets burried(covered-up) and NEVER INVESTIGATED?

    Corporate Miners in Nevada also enjoy protection at Nevada's highest levels of Government from NV Div. of EnviroProtection(miners working for miners)and top legal roadblock artist NV AG Masstos to the miners best friend...Brian Sandoval possing as NV's Governor while protecting such things as mining pollution and mining environmental damages including depleting over one hundred years of ground water storage under Clayton Valley in 45 years time resulting in sinkholes,cracks and subsidence in the playa as over 100 years of other Esmeralda related mining issues continue to NEVER BE ADDRESSED?

    Its good to be king.... I mean a corporate miner in Nevada

    Paul Rupp B125 SP NV 89047

  2. Nevada is one of the few states that has no tax on personal income and corporate income tax is negligible. It is evident that there is a money shortage to fund health, schools, safety, and general welfare. Nevada cries out for a source of income.

    Mining is where the money is. The US Government does require payment if you get grass, rocks, sand, gravel, oil, coal, trees, and geothermal you have to pay something - except for gold. There is no QUID PRO QUO for gold. The laws are antiquated and require some small fees.

    Here are just a few of the laws that govern these things:

    General Mining Law of 1872 - Fee Simple Absolute - location and patenting of mining claims
    Mineral Leasing Act of 1920 - leases for oil, gas, potash, coal, and other minerals
    Outer Continental Shelf Act of 1953 - oil, gas, and other minerals
    Acquires Lands Leasing Act of 1947 - mineral disposal leases
    Materials Act of 1947 - Sole and free use of materials
    Geothermal Act of 1970 - leases

    These laws are OLD. We need to re-look and re-visit this. The whole fee process is governed by antiquated federal law.

    Under the ancient doctrine of Pedis Possessio, miners stake a claim and get an interest and tie up the land. A land grab is going on in Nevada. Miners can actually convert the land to private property through a patenting process. Who is looking out for the people of Nevada?

  3. They are leaving giant holes in the Earth that can be seen from space. They have to pump the water out - dewatering as they go down deep. That fossil water is not going to recharge. Not only are the gold and minerals gone - so is the ancient water. People that allow that to happen are worried about Vegas wanting to transport the water to drink?

    Foreign countries like China have come to Nevada and staked claims around our military bases, prompting the federal government to question our claim process. Corporations according to the US Supreme Court are people. These International Mining Companies can affect our politics by donating money to influence our politicians. Who is watching out for us?

    The state and local officials were asleep at the switch and now federal land in Humboldt County has been set apart most likely for a California dump. Who is stopping Nevada from becoming a dump?

    The State of Nevada has been scarred for hundreds of miles to build a Natural Gas pipeline to hub in Oregon that feeds power plants in California. Who is protecting the citizens of Nevada? If the Governor and the legislature don't fight for us, who will?

    We still have to worry about Yucca Mountain being a waste site. Why should we take the waste of the world?

    People taking value out of the land of Nevada without paying for it is insane. Why would anyone want to protect that? Who is looking out for our citizens, our children, and our future?

    Stop wasting time on meaningless hearings - nothing is passing out of these meetings. Let's do something meaningful - like save our schools. We are not overtaxed and neither is mining. Let's quit giving away our resources for small fees or nothing.

    We need to change our ancient system - support #SJR15 to remove the cap.

  4. In history, there was a great scandal - TEAPOT DOME.

    We need to be careful with Nevada's resources. We need to be treated fairly. Our legislature and Governor needs to be aware that constituents are watching. We don't need a scandal that would rival Teapot Dome.

    Nevada is a state in need of resources to support it's citizens. A state full of gold.

  5. This is a LAND GRAB not a tax initiative. Small time miners cannot pay taxes until after they start making money and showing a profit. This is a way for the big mining companies to get rid of small time miners. That is why they call it prospecting.