Employers taxed by new levies

Las Vegas real estate appraiser Ruth Sunday has no more employees.

Sunday’s Best Business Services shrank in 2007, letting workers go as housing sales plummeted. Today, the appraisal business is hopping, what with sales surging among foreclosures and other existing homes.

Sunday would like to hire staffers to handle the new business, but she said she can’t. The Nevada Legislature nearly doubled the payroll tax on companies with more than $250,000 in annual payroll expenses, raising the levy from 0.63 percent to 1.17 percent of payroll.

Sunday said her only alternative was to bring on self-employed partners in her business, giving them a 1 percent to 5 percent cut of the action.

The Legislature’s move makes little sense to Sunday.

“I’ve never understood why, in an economy when people have no work, when businesses have no clients and aren’t earning money and they have to lay people off or cut hours, the government thinks they can get more money by increasing taxes. It does not compute,” she said.

It’s not computing for a lot of companies these days.

A recent poll commissioned by the Review-Journal found little support among ailing businesses for higher taxes the Legislature passed in the spring. They say they’re beginning to raise prices and cut work forces to handle the new levies.

Among the 99 business owners and managers who participated in the survey, 58 percent said they don’t support the higher payroll tax.

Another 76 percent said they oppose the Legislature’s increase in the annual business license fee, which doubled from $100 to $200.

And 59 percent came out against a sales tax increase, which went from 7.75 percent to 8.1 percent in Clark County.

A third of all respondents said they have tweaked operations to accommodate the new taxes and fees. Among that group, 36 percent have raised their products’ prices, 18 percent let workers go and 12 percent implemented a hiring freeze.

Businesses with less than $500,000 a year in sales have especially felt the hiring crunch, with 22 percent terminating workers and 17 percent stopping hiring.

Businesses that raised prices to account for the new taxes did so by 15 percent on average. Those that reduced staff did so by 25 percent. Companies that reduced payroll also did so by 25 percent on average. Those adjustments might not be enough, with 64 percent of poll participants reporting they would need to take additional action in the future.

State Sen. Steven Horsford, D-Las Vegas, helped steer the budget process that resulted in the new taxes. Horsford said he understands the difficult economic times Nevadans are experiencing, but the state’s budget shortfall — its largest ever — demanded action.

The Legislature responded with a plan designed to balance the interests of consumers and businesses, and to ensure neither group felt unequal burdens, Horsford said.

For example, while the payroll tax rose for companies with annual payrolls above $250,000, it fell for companies below that threshold. Because 74 percent of Nevada businesses have an annual payroll below $250,000, the vast majority of businesses in the state got tax relief.

Horsford said the recession and its accompanying decline in business incomes began long before any new state taxes emerged. Some of the levies went into effect July 1, while others didn’t start until Sept. 1.

It’s probably too early to determine how the taxes will impact businesses, Horsford said, and he ascribed the reported changes in operations more to the economy.

Bob Fulkerson, state director of the Progressive Leadership Alliance of Nevada, advocated for the higher taxes. Yet, he won’t quarrel with businesses’ objections to the taxes or quibble with the economic challenges they face.

What’s more important than all that, he said, is where new revenue will go. It’s destined for public schools, public safety agencies such as the fire department and construction of infrastructure. All of those functions help the corporate world, Fulkerson said. An educated work force means an improved labor force for companies, and building projects put Nevadans to work and give them disposable income to spend with area businesses.

“We need to realize that we’re all in this together. We’re going to sink or swim together in this economy,” Fulkerson said. “If the alternative is some kind of dog-eat-dog, ‘Mad Max’ type of society in which it’s every man for himself, that would be horrible for business.”

Besides, the newest increases come on top of a system already widely regarded as low-tax, Fulkerson said.

The Tax Foundation perennially ranks Nevada as one of the least-taxed states in the country, and a study from the American Legislative Exchange Council said the state has the nation’s seventh-lowest tax burden. The council said Nevada has the fewest public employees per 10,000 residents. Publications from Forbes to Money have praised Nevada’s low-tax business climate, Fulkerson said.

“Relative to the other 49 states, Nevada businesses have it pretty good,” he said.

But it’s not only about the taxes, said Michael Alter, president of SurePayroll, an Illinois firm that provides business services to small companies nationwide. The increases are relatively small, but you can’t separate out one or two expenses and ask if they’re reasonable.

“You have to look at what’s going on all over for businesses. There comes a point where you fall over,” Alter said. “The concern here is, will this be enough of an additional burden that it causes people not to take the risk of opening a new business or expanding?”

The cumulative effect of higher costs is the key problem for Joe Bennett.

Business at Bennett’s World of Taekwondo School has slumped 70 percent compared with a year ago. Though the higher business-license fee consumes just $24 a month, it only adds to a mountain of other expenses such as utilities, Bennett said. Business has been so bad that Bennett will pay this year’s license fee out of his personal income, because his company’s revenue can’t cover it.

Fulkerson said winners of the Nobel Prize in economics have given such business taxes the nod, asserting that boosting levies rather than cutting services is better for a state’s economy.

Alter is not hearing it, though. Over the last 20 years, 94 percent of net new jobs in the economy have come from small businesses, not the government. Plus, if a company lets a worker go to cover a boost in the payroll tax, the economy loses more than it gains in new revenue, as the worker no longer has discretionary income to spend on goods that would ring up sales taxes, Alter said.

There’s frustration even among survey respondents who haven’t had to change their operations for the taxes.

Ron Rollwitz, owner of Northwest Pest Control in Las Vegas, has no employees, so he pays no payroll levy. He provides a service, so his clients don’t suffer the bigger sales tax. His business income can more than cover the doubled license fee and the higher registration costs for his work truck. But it’s the principle of it, Rollwitz said. His business is down 10 percent, and he doesn’t see state and local governments feeling much pain.

“I think everybody should pay some taxes. I understand you can’t have a civilized society unless you pay for certain things like roads, police and firefighters,” Rollwitz said. “My problem is, we keep getting hit with more and more taxes, and there’s an awful lot of waste that’s out there. My clients, they’re trimming their budgets and I’m trimming mine, but the government never seems to have to trim their budget. They just spend more and more.”

Rachel Marcus, owner and director of Summerlin Therapeutic Massage, added: “I am an advocate of helping. I don’t mind paying a little more if it helps the whole community; but if they increase taxes, it’s kind of nondescript. What are they increasing them for? What are they using the extra money for? And do I, as a taxpayer, have any say in that? I would just like to be assured that the taxes are going to a positive source rather than just down a rabbit hole.”

Businesses are looking to save where they can.

On top of not hiring employees, Ruth Sunday has turned to buying as much as she can on the Internet, where sales taxes don’t apply on products bought outside Nevada. It’s her only option. New laws require her to buy several thousand dollars’ worth of appraisal software, and paying the higher sales tax on the computer programs would be “crippling.”

Bob Potter, president of local general contractor Affordable Concepts, isn’t sure how he’ll swing the increased payroll taxes for his staff of 45, but he has asked his employees for suggestions. Whether it’s cutting benefits or asking people to take on more work to negate the need for new hires, the company has to make some decisions.

“We certainly need to do something,” Potter said. “I don’t have an absolute answer. It will probably be a combination of a lot of things.”

Contact reporter Jennifer Robison at jrobison @reviewjournal.com or 702-380-4512.

News
Nature Conservancy Ranch
The Nature Conservancy just bought the 900-acre 7J Ranch at the headwaters of the Amargosa River, north of Beatty. The property could become a research station, though ranching will continue.
Swift water rescue at Durango Wash in Las Vegas
On Thursday, February 14, 2019, at approximately 8:42 a.m., the Clark County Fire Department responded to a report of a swift water incident where people were trapped in the Durango wash which is located near 8771 Halcon Ave. Personnel found one person who was trapped in the flood channel. The individual was transported to the hospital in stable condition. Video by Clark County Fire & Rescue.
Flooding at E Cheyenne in N. Las Vegas Blvd.
Quick Weather Around the Strip
Rain hits Las Vegas, but that doesn't stop people from heading out to the Strip. (Mat Luschek/Review-Journal)
Aaron Semas, professional bull rider, talks about his traumatic brain injuries
Aaron Semas, professional bull rider, talks about his traumatic brain injuries. The Cleveland Clinic will begin researching the brains of retired bull riders to understand the impact traumatic brain injuries have on cognition. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Matt Stutzman shoots arrows with his feet
Matt Stutzman who was born without arms shoots arrows with his feet and hits the bullseye with remarkable accuracy. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Secretary of Air Force Emphasizes the Importance of Nellis AFB
US Secretary of the Air Force Heather Wilson visited Nellis Air Force Base during Red Flag training and described how important the base is to the military.
Former Northwest Academy student speaks out
Tanner Reynolds, 13, with his mother Angela McDonald, speaks out on his experience as a former student of Northwest Academy in Amargosa Valley, which includes abuse by staff member Caleb Michael Hill. Hill, 29, was arrested Jan. 29 by the Nye County Sheriff’s Office on suspicion of child abuse.
Former Northwest Academy students speak out
Tristan Groom, 15, and his brother Jade Gaastra, 23, speak out on their experiences as former students of Northwest Academy in Amargosa Valley, which includes abuse by staff and excessive medication.
Disruption At Metro PD OIS Presser
A man claiming to be part of the press refused to leave a press conference at Metro police headquarters, Wednesday January 30, 2019. Officers were forced to physically remove the man. (Mat Luschek/Review-Journal)
Clients at Las Vegas’ Homeless Courtyard talk about their experience
Clients at Las Vegas’ Homeless Courtyard talk about their experience after the city began operating around the clock. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Las Vegas parts ways with operator of homeless courtyard
Jocelyn Bluitt-Fisher discusses the transition between operators of the homeless courtyard in Las Vegas, Thursday Jan. 24, 2019.(Caroline Brehman/Las Vegas Review-Journal)
Las Vegas police and Raiders partner with SafeNest
Las Vegas police and the Raiders partner with SafeNest on Project Safe 417 (the police code for domestic violence is 417). The program partners trained SafeNest volunteer advocates with Metropolitan Police Department officers dispatched to domestic violence calls, allowing advocates to provide immediate crisis advocacy to victims at the scene of those calls. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
North Las Vegas police chief discusses officer-involved shooting
North Las Vegas police chief Pamela Ojeda held a press conference Thursday, Jan. 24, regarding an officer-involved shooting that took place on Jan. 21. The incident resulted in the killing of suspect Horacio Ruiz-Rodriguez. (Mat Luschek/Las Vegas Review-Journal)
Volunteers gather for annual Clark County homeless count
Volunteers gather for the annual Southern Nevada Homeless Census, Tuesday, Jan. 22, 2019. (Chase Stevens/Las Vegas Review-Journal)
Who can understand hospital price lists?
Lists of costs for procedures, drugs and devices are now posted the websites of hospitals to comply with a new federal rule designed to provide additional consumer transparency. Good luck figuring out what they mean.
People in Mesquite deal with a massive power outage
People in Mesquite respond to a major power outage in the area on Monday, Jan. 21, 2019. (Mat Luschek/Las Vegas Review-Journal)
Group helping stranded motorists during power outage
A group of Good Samaritans are offering free gas to people in need at the Glendale AM/PM, during a massive power outage near Mesquite on Monday, Jan. 21, 2019. (Mat Luschek/Las Vegas Review-Journal)
U.S. Sen. Jacky Rosen falls at Las Vegas parade
U.S. Sen. Jacky Rosen of Nevada fell and injured her wrist at the Martin Luther King Day parade in Las Vegas on Monday, Jan. 21, 2019. (Nathan Asselin/Las Vegas Review-Journal)
Local astronomers host super blood wolf moon viewing
The Las Vegas Astronomical Society paired with the College of Southern Nevada to host a lunar eclipse viewing Sunday night. Known as the super blood wolf moon, the astronomical event won't occur for another 18 years. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Tate Elementary shows academic progress after categorical funding
Students at Tate Elementary in Las Vegas has benefited from a program to boost education funding in targeted student populations, known as categorical funding. One program called Zoom helps students who have fallen below grade level in reading. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
The third annual Women’s March in Las Vegas
The third annual Women’s March in Las Vegas. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @btesfaye
First former felon to work for Nevada Department of Corrections
After his father died, Michael Russell struggled for years with drug addiction. When he finally decided to change for good, he got sober and worked for years to help others. Now he is the first former felon to be hired by the Nevada Department of Corrections. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Three Square helps TSA workers
Three Square Food Bank donated over 400 care bags to TSA workers affected by the government shutdown Wednesday, filled with food, personal hygiene products and water.
Las Vegas furniture store donates to Clark County firehouses
Walker Furniture donated new mattresses to all 30 Clark County firehouses in the Las Vegas Valley, starting today with Station 22. (Mat Luschek/Las Vegas Review-Journal)
Mount Charleston Gets Heavy Snow, Fog
Mount Charleston saw heavy snow today, and fog in lower elevations as a cold front swept across the Las Vegas Valley. (Benjamin Hager/Las Vegas Review-Journal)
Krystal Whipple arrested in Arizona
Krystal Whipple, charged in the killing of a Las Vegas nail salon manager over a $35 manicure, is expected to return to Nevada to face a murder charge.
Holocaust survivor on acceptance
Holocaust survivor Celina Karp Biniaz, who was the youngest person on Schindler’s List, talks about the most important message for people to understand from her life and experiences.
Holocaust survivor speaks about telling her story
Holocaust survivor Celina Karp Biniaz, who was the youngest person on Schindler’s List, tells of opening up about her experiences during Sunday’s event at Temple Sinai.
Jesus Jara State of the Schools address
Clark County School District Superintendent Jesus Jara delivers his State of the Schools address on Friday, Jan. 11, 2019. (Amelia Pak-Harvey/Las Vegas Review-Journal)
ad-high_impact_4
TOP NEWS
News Headlines
Home Front Page Footer Listing
You May Like

You May Like