Senator presents alternative tax plan to hike school funding

By Riley Snyder and Michelle Rindels, Associated Press

Tuesday, March 24, 2015 | 11:36 p.m.

Democratic Sen. Pat Spearman presented a tax plan Tuesday that she said gives one more route toward the goal of raising Nevada education funding by several hundred million dollars each year.

Spearman's bill, SB378, joins Gov. Brian Sandoval's proposal and a plan from Assembly Republican leaders, all of which aim to help raise about $7.3 billion in state revenue during the next two years. All three groups with a tax bill have shied away from publicly criticizing the other proposals, saying they simply want to promote a robust discussion.

"Everybody who has a plan wants to get to that place where we fund education and provide essential services," Spearman said. "I'm hoping people won't reduce this to partisan (politics)."

Spearman's bill would impose a 0.465 percent tax on business gross receipts that exceed $25,000 in a quarter. While gross-receipts plans have failed in the past, Spearman said the rate is far lower than historic versions.

Her bill would also repeal the modified business tax on all industries except for mining and financial services. That tax is levied on gross wages, but it acts as a disincentive for adding new employees, she said. Spearman said she feared relying on the tax because of inherent structural problems.

"The MBT can't be that great, because we keep talking about what we can do to fix it," Spearman said during the hearing.

Republican Committee Chairman Sen. Michael Roberson said he agreed that the state's modified business tax has issues, but that removing the tax in favor of one focused on gross receipts could hurt the state's small businesses and make future revenue projections shaky.

"I do think this is pretty simple. I do think it broadens the base," he said of Spearman's tax plan. "I just don't think it's fair."

Spearman's bill also calls for a flat $200-per-year business license fee, except for companies that are incorporated in Nevada but don't conduct trade in the state. Those businesses would pay $400.

"It provides everyone that has the privilege of doing business in Nevada an opportunity to invest in Nevada," she said.

The plan differs from Sandoval's, which would leave the modified business tax alone but restructure the state's flat business license fee into a tiered system with rates ranging from $400 to $4 million annually. Sandoval said his bill, SB252, would spread the tax burden more evenly across the state's estimate 330,000 business entities.

Assembly Republican leadership introduced a proposal that takes the opposite tack of Spearman's bill, raising the rate of the modified business tax and raising the business license fee slightly. While the modified business tax only applies to about 4 percent of businesses, it's among the most stable and predictable options on the table, proponents say.

"Our intention with this bill is not to be a competing measure, but just to show different paths to the same end result," Republican Assembly Majority Leader Paul Anderson said. "It's just simply a starting point to continue the discussion."

The Spearman plan was opposed by the Nevada Bankers Association on grounds it would be double taxed. The Las Vegas Greater Metropolitan Chamber of Commerce and the Nevada Taxpayers Association took neutral positions until they have a chance for more study.

Sun reporter Cy Ryan contributed to this report.