Nevada needs jobs. Increasing taxes on job creators will not put people back to work. It will discourage job creation and, without question, cost untold numbers of workers their jobs when struggling companies are forced to close their doors.
It defies common sense that, in pursuit of a massive infusion of public dollars for schools, Nevada’s teacher unions would qualify for November’s ballot a tax that would make a state with crippling unemployment significantly less attractive for business investment. The margins tax, now known as Question 3, would hit all businesses with more than $1 million in annual revenue with a 2 percent levy. Even money-losing businesses, which are too common in Nevada, would be hit by the tax.
The Nevada State Education Association estimates the tax will transfer about $400 million per year from the private sector to the public sector, but studies on behalf of industry show the levy will do far greater economic damage. The Guinn Center for Policy Priorities pegs annual tax revenues at $460 million, while Applied Analysis estimates collections of between $650 million and $750 million.
Nevada already has the highest insurance premium tax rate in the country, but the insurance industry would be tapped for an additional $60 million in taxes if Question 3 passes, according to an Applied Analysis study. “That is a cost that ultimately will be paid by Nevada consumers,” said Michael Geeser, president of the Nevada Insurance Council, which commissioned the study. That’s $60 million in reduced spending at other businesses.
Those figures are so large no one can reasonably argue that there won’t be negative economic consequences. Nonetheless, that appears to be proponents’ game plan.
“This statement by big insurance is nothing but a bully tactic based on hypotheticals designed to enable it to avoid paying its fair share,” NSEA President Ruben Murillo told the Review-Journal’s Laura Myers last week.
This week brought news that Nevada’s unemployment rate, at 8.7 percent, is no longer the nation’s worst, and that January’s year-over-year job growth led the nation. Yet, as reported by the Review-Journal’s Jennifer Robison, Nevada still has 92,000 fewer jobs than it did in 2007. “We are far from recovered. … By no means are we out of the woods,” said Brian Gordon of Applied Analysis.
Tax businesses when we’re not out of the woods? Tax the companies that would put Nevadans back to work amid a fragile recovery? That’s beyond dumb. It’s destructive.