State needs to extract more taxes from mining

On Nov. 4, Nevada voters will decide whether to remove mining’s unique, 150-year-old tax protections from the state constitution and allow the Legislature to update the mining tax system to reflect modern times.

Passage of Question 2 won’t raise or lower the taxes that mining pays. But it will remove the special protection that no other industry in our state enjoys.

Nevada’s mining taxes are nearly nonexistent compared with the rest of the world, and we are one of three states with no corporate profits tax to help pay for the services that benefit those corporations. Billions of dollars of mineral wealth has been extracted here; the vast majority has been exported. It’s been that way since statehood, when gold and silver from the Comstock built San Francisco and the Pacific Stock Exchange.

Nevada is the No. 1 gold producer in the United States and one of the top five gold producers in the world. Mining corporations account for 98 percent of toxic chemicals released in Nevada, according to the Environmental Protection Agency, and a single gold ring leaves in its wake, on average, 20 tons of mine waste. The average gold mine uses enough water to provide the basic water needs for a population equivalent to that of a large American city for a year.

In 2011, the laundry list of deductions, coupled with the fact that the mining companies had rarely, if ever, been audited by the state, came to light during hearings. Legislators discovered that mining lobbyists had gamed the Tax Commission and Nevada taxpayers by writing in deductions on everything from the dues to the World Gold Council to double-dipping on health care deductions. Even the president of the Nevada Mining Association admitted some of the deductions were questionable. The Legislature passed Senate Joint Resolution 15, which is the first step to removing mining’s loopholes from the state constitution.

The following session, in 2013, big mining had one lobbyist for every two legislators. They arrived with guns blazing and threatened lawsuits, reduced funding and even offered a $50 million bribe to the Nevada Legislature to kill SJR 15. Legislative leaders demonstrated commendable resolve under such immense pressure from big mining.

Clark County residents know that whether the Strip booms or loses money, schools in Elko and other mining towns are still funded by dollars from Clark County. Yet when mining does well, Clark County sees no increase in its revenues. Nevada’s world-class gold industry brought in $8.1 billion in 2013, and paid to the state general fund $74 million in mining taxes, for a tax rate of less than 1 percent.

Contrast this with Nevada’s gaming industry, which paid $694 million on gross revenues of $10.8 billion in 2012, a 6.6 percent tax rate. Or a regular working stiff in Clark County, who pays a sales tax rate of 8.1 percent — eight times the rate transnational mining conglomerates pay in mining taxes to the general fund.

Mining does pay sales tax and certain property taxes, just as unemployed and minimum wage workers do. But gold mining is different, so it should be taxed differently. We can always deal another deck of cards or order another meal. With mining, once that gold is severed from the ground, it’s gone forever, along with our one chance to capture revenue for the public good.

Making mining pay what they pay in other states or countries would not cause them to suffer or abandon operations here. According to the Fraser Institute, Nevada is one of the most stable, mineral-rich, least-taxed places to mine on the planet. More than one-quarter of Newmont Mining Corp.’s and more than one-third of Barrick Gold Corp.’s reserves are in Nevada. If they move because voters pass Question 2, they’ll have to take the world-renowned Carlin Gold Trend with them.

Many Nevadans are fond of saying “government mustn’t choose winners or losers.” Yet that’s exactly our state’s policy when it comes to mining’s loopholes. To remedy this, voters must pass Question 2. Then we can enact a reasonable severance tax on mineral production to provide funding for education, training and research that will create a bright and diverse future for Nevada, long after these foreign mining corporations have left.

Bob Fulkerson is state director of the Progressive Leadership Alliance of Nevada.