Small-business backers of a proposed 2 percent margins tax on Nevada companies on Wednesday launched their campaign to promote the “Education Initiative,” or Question 3 on the Nov. 4 ballot.
Proponents argued that investing more in schools will reap benefits for the state and it’s time for businesses to contribute more. Nevada graduates about two-thirds of its high school students, one of the lowest rates in the nation.
“Part of our responsibility as business owners is to invest in the communities in which we do business,” said Dominic Cacioppo, a veterinarian and owner of Park Animal Hospital, which would be affected by the tax. “It’s simply an investment in our future.”
Cacioppo opened his Las Vegas animal hospital in 1991.
Other business owners who are part of the campaign to pass the margins tax include Trevor Layne, owner of Movies and Candy in Henderson, a video rental and candy store that opened in November 2012, and Cassie Rice, owner of GymCats. The Las Vegas studio, which opened in 1992, trains children in dance, gymnastics, martial arts and cheerleading.
The business owners and about three dozen members of the community held a news conference for the Education Initiative late Wednesday afternoon outside the Las Vegas Metro Chamber of Commerce, which has come out in opposition to the margins tax. The initiative is backed primarily by the Nevada Education Association teachers’ union.
The Las Vegas chamber is part of the Coalition to Defeat the Margins Tax Initiative, which consists of large business associations such as the Nevada Mining Association and the Retail Association of Nevada.
On Tuesday, Republican Gov. Brian Sandoval, who also opposes the margins tax, issued his latest warning that if the measure passes it could deliver a “fatal blow” to small businesses and could halt Nevada’s economic recovery.
If approved, the 2 percent tax would apply to businesses making more than $1 million in annual revenue, raising $650 million to $750 million a year, according to a study by Applied Analysis. Even an unprofitable company would have to pay.
The money would go into the State Distributive School Account in Nevada’s general fund. Critics contend there’s no guarantee education funding would increase because the governor and the Nevada Legislature could reduce the amount of general fund money they put into the school fund and use it somewhere else in the budget.
“It could be funneled right back out of the account,” said Karen Griffin, a spokeswoman for the Coalition to Defeat the Margins Tax Initiative who watched the news conference.
Griffin said businesses that would be hit by the tax include Nevada’s largest employers and small businesses that could go under. She said the cost would be passed on to Nevadans from the grocery store to local restaurants. “We’re talking about killing jobs,” she said.
But Dan Hart, a spokesman and strategist for the Education Initiative, said “there’s no wiggle room” in the initiative and the money must boost education spending. Politically, it could prove difficult to cut education funding or hold it steady if the tax is approved by voters, who could be upset if their wishes aren’t carried out.
Hart also noted that 87 percent of Nevada businesses wouldn’t be subject to the margins tax. He said Sandoval is focused on protecting big businesses that have donated to his 2014 re-election campaign, which collected about $3 million last year.
“I think he’s protecting his contributors,” Hart said of the governor. “I think most of his contributors are opposed to the initiative. They are major corporations who ship profits out of state and he’s protecting them.”
Hart said a poll of voters taken last year by proponents of the Education Initiative showed strong support for the margins tax. The survey by the Nevada State Education Association found 61 percent support the tax and 34 percent oppose it.
“I don’t know if all this insider talk has any effect on Joe Sixpack,” Hart said, dismissing political naysayers.
Another poll taken in the fall by the Nevada Retail Association, however, saw a split result: 46 percent believe the margins tax would provide needed revenue for education, while 47 percent believe it would hurt the economy and increase unemployment. Support declined when respondents were asked if they would vote for the tax if it hurt
Rice, owner of GymCats that would have to pay the tax, said the state’s focus needs to be both on attracting new businesses and improving education.
“We don’t want Nevada kids to be left behind.” Rice said. “We want them to be great future leaders.”
Contact reporter Laura Myers at firstname.lastname@example.org or 702-387-2919. Follow her on Twitter @lmyerslvrj.