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June 15, 2019

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jon ralston:

Democrats have right idea on taxes, but it’s too late

As I listened to the Democratic tax plan Thursday, a thoughtful, even visionary look at stabilizing the state and bringing it out of the Mesozoic funding era, I closed my eyes. When I opened them, I fervently hoped, it would be Jan. 15, not May 5.

The ideas — lifting tax sunsets, enacting a sales (transactions) tax on services and a franchise tax — had been hovering in the Legisophere for months, nay years. The Democrats, despite their hollow excuses throughout the session, have known the contours of the Great Tax Plan for months. (And so has most everyone else.)

But they should have showed their cards early, not waited until a month is left in the session to propose the largest tax increase ($1.5 billion) in state history, when any chance of passing substantive, dramatic policy changes is virtually impossible. The leaders should have shown a stark contrast to Gov. Brian Sandoval’s vision for the state, telling Nevada residents what the short- and long-term effects are of not having the long-delayed discussion of how the state raises and spends money.

This is nothing short of the “what kind of state do you want to be” dialogue that lawmakers (many well-intentioned) always put off as they try to cobble together some nonsensical tax abomination and buy votes, with pork or pet bills, to pass it.

This is not déjà vu all over again. This is déjà vu still, always, forever. It never ends, like “Groundhog Day” without the comedy or happy climax.

I know what the Democrats were “thinking.” If we put out the plan too early, everyone will throw rocks at it for 120 days and kill it. So let’s pretend we don’t have a plan yet and show how awful the Sandoval cuts are and … voilà, we unveil in May and they will greet us with bouquets. Kind of like they did the troops in Iraq. Where are the weapons of mass taxation?

The Democrats thoroughly underestimated Sandoval, whose political canniness and toughness is belied by his Gov. Sunny persona. And their tactics hardened Republican votes they might have been able to coax to their point of view. It was nothing short of astonishing to hear two potential tax votes in January — state Sens. Joe Hardy and Ben Kieckhefer — sound this week on “Face to Face” as if they were possessed by the spirit of Grover Norquist.

And I think it’s too late for Max Von Sydow to be summoned for an exorcism. It’s not that the devil is in the details — the details don’t even matter because too many Republicans won’t listen and Sandoval will do everything he can to hold the GOP caucus. Worse, the GOP noise machine will crank up the volume, screeching, threatening, intimidating any Republicans who actually uncover their ears and dare to listen to the plan.

It is sad, depressing and … utterly predictable.

And so we get down to policy vs. process. Politicians — remember how famous Bill Clinton was for this — hate it when the media do “process” stories instead of “policy” stories. What that means is they want us to forget the reality of politics and personalities and just tell the world they are right.

Well: The Democrats are right. The tax base does need to be broadened and they have a way that most tax studies over the years would validate. Even the Nevada Policy Research Institute supports a sales tax on services if it’s revenue neutral and lowers the sales tax rate. The franchise tax, modeled after one in Texas imposed by a Republican governor, makes a lot of sense and isn’t unlike a gross receipts tax entombed in 2003. It would exempt most small businesses and would not create a mini-Internal Revenue Service or allow businesses to escape taxation, as a net profits tax would.

And the idea to repeal the payroll tax, which was the so-called tax broadening sop substituted for the gross receipts eight years ago, should be welcomed by almost everyone.

But, I fear, the Democrats have blown it with their mismanagement of the issue. The process they have used has killed the policy they want. Yes, politicians understand fear best of all. But these legislative Republicans, emboldened by Sandoval, will extract a hard bargain just to lift the tax sunsets on sales and payroll taxes — and this entire fight is being fought on the GOP battlefield.

“Everyone has a price,” Kieckhefer said, somewhat inelegantly but truthfully on “Face to Face.” But what will the Democrats have to give up to buy GOP votes?

My guess is even if they are lucky enough to scratch out enough votes to lift the sunsets — and I am not sanguine — they will have to look in the mirror and wonder if they sold their souls for very little gain.

(The plan is here:

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