Thursday, November 21, 2002
Copyright © Las Vegas Review-Journal

COLUMN: Steve Sebelius

Revenge of the capitalists

The Las Vegas Chamber of Commerce bills itself as "the voice of business." And in this case, that voice is saying, "Read my lips: no new taxes."

The Chamber put out a news release Wednesday saying it was fine with the recommendations of the Governor's Task Force on Tax Policy for an admissions tax, a property tax increase, a corporate filing fee increase and a business license tax, but that they'd have to take a pass on supporting the gross receipts tax on business. That tax is "regressive and unfair" and punishes low-margin businesses, the Chamber says.

Unfortunately, the gross receipts tax is the centerpiece of the task force's proposal, projected to raise between $227 million and $275 million each year for the rest of the decade. Compared to that, the taxes the Chamber said it would support amount to chump change.

It's quite a change from 2001, when the Chamber agreed that a "broad based business tax" was going to be a part of the solution to Nevada's budget dilemma.

In a white paper issued last year by a business group of which the Chamber was the most prominent member, business officials wrote thusly: "And these needs will require revenues -- additional revenues over what is currently raised to fund the state's budget, from existing or new sources, or a combination. As the Nevada business community, we understand that our share of paying for these needs is naturally -- and politically -- the giant share and that a broad-based business tax will undoubtedly be a component of any future funding of state needs."

This white paper was written against the backdrop of the teachers' union's failure to get a 4 percent business profits tax past the state Supreme Court.

Let's review: The Chamber was, and is, against a business profits tax. The Chamber is against a gross receipts tax. Yet the Chamber pledged to support a broad-based business tax.

Could they have meant "broad" as in women, and business as in "adult business," like a levy on lapdancing, perhaps?

That was a joke. But it's not far from the official explanation. The business license tax is broad-based, since all businesses pay it, says Chamber President Kara Kelley. And the property tax is broad-based, too, since business pays about half of the state's property taxes.

But what about the 2001 promise? Kelley says things have changed dramatically since that statement was written. There were the Sept. 11 attacks. The state's projected short-term deficit has grown, until Guinn says he needs another $462 million next year. (Although, tellingly, the white paper does correctly identify the long-term deficit at around $800 million.)

"This is a different day," Kelley says. "The times have changed."

But the more times change, the more they stay the same. Mike Sloan, senior vice president of the Mandalay Resort Group and a member of the tax task force, says the business community's opposition to taxes is nothing new.

"It's very self-serving and it's not in keeping with the promise they made to the Legislature," Sloan says. "No one should be surprised."

Sloan says a sales tax on services could raise the $250 million or so that the gross receipts tax is projected to take in each fiscal year, depending upon what services are taxed and at what rate. But, he asks, is it fair to impose a tax that businesses simply collect from residents when they buy haircuts, car repairs, dry cleaning, legal work or accounting? Or is it more fair to tax corporations that make big profits in Nevada but pay only the property tax and the $100-per-employee head tax?

It's a damn good question. And there are some in the Legislature whose answer seems to favor the corporations. "You have a number of lawmakers, principally Republicans, who ware more concerned about the profitability of corporations than the tax burden of individuals," Sloan says.

And make no mistake: The admissions tax, the property tax and a sales tax on services will fall disproportionately on residents.

So now what? Sloan says the gambling industry hasn't decided to make the gross receipts tax an issue to die for, and Kelley says she's optimistic there won't be a knock-down, drag-out fight in Carson City. But it's hard to see how either could be right: The gambling industry doesn't want lawmakers to only have the option of raising the gross gambling tax if times get really desperate, and creating a gross receipts tax would open a fertile new field of revenue-gathering for the state. But the Chamber has proven its acumen in defeating taxes, aided by certain anti-tax lawmakers and the sensible argument that government should cut budgets in tough times.

Both sides are right: There are places in government where spending could easily be trimmed while leaving important services -- education, Medicaid, mental health services and public safety -- unharmed. But there is no way to fund those services to an acceptable level without raising taxes, no matter how much is cut.

At least now we know where everybody stands.

Steve Sebelius is a Review-Journal political columnist. His column runs Tuesday, Thursday and Sunday. Reach him at 383-0283 or by e-mail at ssebelius@reviewjournal.com.