Q+A: Voters’ guide for Nevada margin tax

By Kyle Roerink

Friday, Oct. 3, 2014 | 2 a.m.

Some call it the margin tax. Others call it the Education Initiative.

On the Nov. 4 ballot, voters will see it as ballot question No. 3.

The ballot measure proposes a 2 percent tax on any business generating more than $1 million in annual revenue. The tax would generate an estimated $700 million for the state schools fund.

Without a big-name race on the ballot, Question No. 3 is one of the most closely watched campaigns this election season. The measure pits the teachers' union against business leaders. By June, the two campaigns had raised more than $4.8 million to sway voters.

Why is this question on the ballot?

Nevada's public schools have consistently ranked among the worst in America. Education supporters, frustrated with inaction from state leaders, took matters into their own hands. They collected more than 100,000 signatures to put the initiative on the ballot.

Who supports the measure?

The Education Initiative is backed primarily by the Nevada State Education Association, the teachers union, and the union-backed Progressive Leadership Alliance of Nevada. The education association, which has 28,000 members, is funding and operating the campaign to support the measure. As of June, the initiative raised $2.5 million, with nearly all of it coming from the teachers union.

Sen. Tick Segerblom of Las Vegas is the only politician who's publicly supported the measure and donated to the campaign.

Who opposes the measure?

The Coalition to Defeat the Margin Tax Initiative, backed by many of the state's biggest industries, is campaigning against the measure. The coalition has some unlikely advocates. Big business (including casinos and mining) opposes the measure and so does the AFL-CIO, which represents 200,000 workers in 120 unions.

Opponents point out that the 2 percent tax would be on businesses revenues, not profits. For businesses that make more than $1 million in revenue but operate on small margins, the 2 percent tax would take a significant chunk out of their profits. They say that would lead to job cuts and higher costs for consumers.

Politicians who oppose the measure include Republican Gov. Brian Sandoval and Democrat Lucy Flores, an assemblywoman and lieutenant governor candidate. Almost every Nevada legislator is opposed or hasn't taken a public position.

The campaign had raised $2.2 million as of June. The biggest donors include the Nevada Resort Association, the Las Vegas Metro Chamber of Commerce and the Nevada Mining Association.

What does the research say?

It depends on whom you ask. Here's what the studies have said and who paid for each.

UNLV Center for Business and Economic Research: The tax will generate up to $362 million and create 11,500 jobs by 2016. Paid for by the Education Initiative.

Applied Analysis: The tax would cost the state nearly 9,000 private sector jobs and $413 million in employee wages. But those losses could be offset, partially or entirely, by growth in public sector employment paid for by the tax measure. The growth in public sector jobs depends on how the Legislature decides to spend the money. Paid for by the Coalition to Defeat the Margin Tax Initiative.

The Beacon Hill Institute at Suffolk University in Massachusetts: The tax will raise $862 million each year while costing the state 1,640 jobs. Paid for by the Nevada Policy Research Institute, a libertarian think tank.