Gov. Brian Sandoval closes loophole, will maintain payroll tax rate

By David McGrath Schwartz

Wednesday, Jan. 12, 2011 | 3:16 p.m.

Gov. Brian Sandoval will keep the payroll tax rate at its current level for small businesses, adhering to his pledge not to raise taxes on business and creating an additional $18 million hole in the state budget.

An estimated 70 percent of Nevada's businesses would have had their payroll tax increased, the result of Sandoval's promise to reset tax rates at levels prior to the Legislature's 2009 increase.

The Sandoval administration said Tuesday it was re-examining the budget after a loophole was raised by the Las Vegas Sun.

Today, Chief of Staff Heidi Gansert said the payroll tax rate would remain at 0.5 percent for the first $62,500 a year of an employee's wage. Higher wages will be taxed at .63 percent, down from the 1.17 percent rate that the Legislature raised it to in 2009.

Sandoval has promised not to raise taxes and to allow the taxes passed in 2009 to expire on June 30, 2011.

The extra $18 million hole is not insignificant, but is only a portion of the state's estimated $2.2 billion shortfall to preserve current services and extend furloughs for state workers.