Thursday, April 25, 2002 | 9:15 a.m.
CARSON CITY -- A plan to increase state tax revenue by 52 percent by hitting business and wealthy investors has been outlined by a social activist group that admits it will have a tough time selling its proposal to the 2003 Legislature.
The Progressive Leadership Alliance of Nevada released its tax plan Wednesday, calling for a 5 percent business tax plus a tax on investment income of more than $100,000 from such things as capital gains, dividends, interest income and trusts.
Paul Brown, leader of the Las Vegas office of the alliance, said at a news conference that it would be "extremely difficult" to sell the package to the Legislature. But the group plans to keep heat on public officials.
In addition to the investment and business taxes, the proposal includes a 50 percent increase in the liquor tax and a 57.1 percent tax increase on a carton of cigarettes.
The alliance said the plan would add $932 million a year to the state's $1.7 billion tax collections.
The increased revenue would go to education and social programs and bring them up to the national averages, according to the alliance.
Bob Fulkerson, state director of the alliance, said the tax plan has been developed over the past two years. Jan Gilbert of the group said it will be presented to the Governor's Tax Task Force, which is trying to come up with a plan to meet a shortfall on tax revenue.
The alliance has 52 member organizations that include minorities, labor, women's groups, the union of schoolteachers, gays and social reformers.
Brown said the alliance will "keep the pressure" on the Legislature and Gov. Kenny Guinn to back the package. One element of the plan is a 5 percent tax on business profits above $50,000. That is similar to a proposal advanced two years ago by the teachers union, which could not get any legislator to introduce it.
Gilbert said this would raise $341 million a year and that as much as $179 million of the total would come from out-of-state companies. Fulkerson said Nevada is giving corporations a "free ride." He said Nevada taxpayers subsidize such firms as Wal-Mart that pay low wages and offer little benefits. The employees of Wal-Mart end up costing Nevada taxpayers for such things as medical treatment, he said.
The alliance is also calling for a 6.8 percent tax on investment income above $100,000. Gilbert said this would hit five percent of the population and would raise $546 million annually.
The group said this would require a constitutional amendment that would take five years to enact. There is a question whether this type of tax is prohibited by the Constitution, the group said.
The 50 percent tax increase on liquor would equate to 2.5 cents on a six-pack of beer. The cigarette tax increase would boost the cost of a carton by $2. Those increases would bring in close to $45 million, according to the group. Gilbert said these two taxes have not been raised in 13 years.
There was no specific tax increase for the gaming industry in the plan. But Gilbert said casinos would pay the 5 percent business tax on profits made from other revenue such as restaurants and rooms.
"We felt we should broaden the tax base," said Gilbert. Revenue from casino taxes is unstable, she said.
Of the package, $500 million would be plowed into the public schools in an attempt to bring funding up to the national level. Nevada, according to some studies, is about $1,000 per pupil behind the national average.
About $250 million would go for social services.
Brian Lahren, a longtime advocate of mental health programs, said "Nevada has turned its back on the civil rights" of the disabled for years. He said disabled groups are looking to sue and "Nevada cannot win a lawsuit" over the level of services it provides.
If new taxes are not imposed, then the court-ordered increases in social programs will have to come out of other budgets, he said.
"Our human services are the worst in the nation," Lahren said.
The Governor's Task Force on Taxes has been told the state will operate at a $307 million annual deficit by the year 2010. Gilbert said she has called Guy Hobbs, chairman of the tax committee, to ask for a place at a future meeting to outline the plan.
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