Talking taxes

The second week of the 2013 Legislature is not quite over, and already Nevadans have heard more open, honest discussions about state tax policy than they typically get in an entire regular session.

That’s a good thing. Previous years generally have followed the same script: Democrats coyly deny they want to raise taxes, all the while secretly developing a proposal for major tax hikes, then make the plan public at the last possible moment. At which point, having already killed every Republican bill that could be used as a bargaining chip to gather the votes needed to pass the tax hikes, Democrats bemoan the GOP’s reluctance to climb aboard their bandwagon.

But new Democratic leadership has brought a new approach. Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, and Senate Majority Leader Mo Denis, D-Las Vegas, have been upfront about their goal of overhauling Nevada’s tax structure. Sen. Denis has made it pretty clear that he wants tax increases as part of those reforms, while Ms. Kirkpatrick says she is inclined to support revenue-neutral tax policy changes.

“It is our responsibility to get something done this session, and that is where we are headed,” Ms. Kirkpatrick told the Review-Journal’s capital bureau.

This debate has some urgency because of a Nevada State Education Association initiative to create a 2 percent margins tax on all business revenue beyond $1 million, with some deductions. The Legislature is expected to ignore or reject the petition, which would tax even businesses that lose money. That would send the plan to voters in November 2014.

No one, not even the teachers union, wants to see the margins tax hit employers on top of new ObamaCare burdens and the state’s current Modified Business Tax, or payroll tax, which penalizes pay raises and job creation. So tax reforms are expected to propose new levies, such as a services tax, that could replace the payroll tax. Anything that might stimulate job creation in the state with the nation’s highest unemployment rate is worthy of open discussion.

But it will be important for lawmakers to get to the nuts and bolts of new taxes very soon. Sen. Denis is plotting a familiar course in Carson City, where lawmakers spend months determining whether the governor’s budget adequately funds state services before launching the discussion on the size of the tax increases Democrats want. There’s no reason lawmakers can’t simultaneously have public debate on new levies, giving them time to root out potential unintended consequences. Talk tax structure now, tax rates later. There are just over 100 days left in the session.

There’s another important consideration here: Democrats will need at least one Republican vote in the Assembly and three GOP votes in the Senate to get what they want. GOP lawmakers have said they support Republican Gov. Brian Sandoval opposition to tax increases beyond those that extend temporary levies an additional two years.

If majority Democrats are serious about passing their agenda, it will take political good will to bring aboard Republican support. That means committee hearings for the kinds of GOP bills that typically never see the light of day: construction defect reform, collective bargaining reform, pension reform, education reform and campaign transparency. Let’s see open debate on these issues, too.

Is some kind of grand bargain possible in Carson City? It’s too soon to tell. But the 2013 session is off to a promising start.