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.

ad-high_impact_4
News
Metro Asst. Sheriff Brett Zimmerman on Aug. 8 officer-involved shooting
Metropolitan Police Department Assistant Sheriff Brett Zimmerman met with media Monday to discuss the details of the 14th officer-involved shooting of the year. (Madelyn Reese/ Las Vegas Review-Journal)
Clark County School Board president Deanna Wright on travel expenses
Clark County School Board President Deanna Wright says she followed proper expense protocol in trip to Florida last year.
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program where community and business leaders joined to welcome students back with an inspirational welcome. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Shooting leaves 1 dead in southeast valley
A man was found fatally shot in the doorway of a squatter apartment after an argument ended in gunfire on Sunday night. Officers responded about 10:30 p.m. to the Silver Pines apartments and discovered the man in a breezeway in one of the buildings. The wounded man died at the scene, despite the efforts of another person, who tried to administer medical aid. Witnesses saw a man and a woman flee the scene, but were unable to give police a clear description.
North Las Vegas unveils new school crosswalk
North Las Vegas councilman Isaac Barron talks about the new school crosswalk in front of CP Squires Elementary School Monday, August 6, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
LVMPD Briefing on OIS #13
Assistant Sheriff Tim Kelly held a press conference to discuss details of the 13th officer-involved-shoot for the department in 2018. Video shows the moments before the suspect was shot. The shooting, which has been edited out, occurred as the suspect lunged at an officer outside the apartment. (Madelyn Reese/Las Vegas Review-Journal)
Sedan and semitrailer collide in south Las Vegas
An early Wednesday morning crash has left one person in critical condition. A sedan and semitrailer collided around 4 a.m. at the corner of Spencer Street and Serene Avenue. Police do not believe impairment is a factor in the crash. Spencer has been blocked off north of Serene while police continue their investigation.
Cybersecurity Professionals Flock to Las Vegas for Black Hat
Black Hat USA, the largest annual cybersecurity conference, is expecting a record 17,000 attendees during its six-day run at the Mandalay Bay Convention Center this week. One thing attendees have in mind is making sure they don't get hacked while they're there. (Madelyn Reese/Las Vegas Review-Journal)
Police chase ends with suspects captured in east Las Vegas
An early Tuesday morning chase ended with a car crash in an east Las Vegas neighborhood. Police were pursuing the vehicle, which they say was involved in robberies in Las Vegas and North Las Vegas, when the driver crashed at Owens and Statz Street. A man was taken into custody. A woman was ejected from a vehicle and taken to a hospital with non-life threatening injuries. The intersection at Mojave Road and Owens Avenue was shut down while police officers searched for the suspect and investigated. The intersection will remain closed for most of the morning.
Record number participate in Touro University Nevada White Coat Ceremony
Three hundred sixty-five medical students received their white coats during the Touro University Nevada White Coat Ceremony at the M Resort in Henderson Monday. The ceremony was developed to honor students in osteopathic medicine, physician assistant studies, nursing, occupational therapy and physical therapy as they accept the professional responsibilities inherent in their relationship with patients. (K.M. Cannon/Las Vegas Review-Journal)
Stop for school buses, urges CCSD
Clark County School District Police Department hold a mock traffic stop at Centennial High School in Las Vegas, Monday, Aug. 6, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Work Begins at Las Vegas Community Healing Garden
Crews moved the wooden Remembrance Wall at the Las Vegas Community Healing Garden on South Casino Center Boulevard Monday. Construction on a permanent wall is set to begin within the week. (Madelyn Reese/Las Vegas Review-Journal) @MadelynGReese
Man wounded outside Cottages apartment
Las Vegas police don't have a motive after a man was shot early Monday morning outside a northwest valley apartment. The man's mother called police to say her son had been shot. She called police around 1:15 a.m. Other people were inside the apartment but no one else was injured. Police are still looking for the shooter.
Ride new Interstate 11 segment in one minute
Interstate 11 opens to the public Thursday, providing sweeping views of Lake Mead, art deco-style bridges and a mural illustrating the construction of Hoover Dam. (K.M. Cannon/Las Vegas Review-Journal)
Miss El Tiempo 2019
Miss Teen El Tiempo and Miss El Tiempo 2019 were crowned at Sam's Town Saturday, August 4, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Las Vegas Woman Raises Awareness for Anxiety and Depression
Cassi Davis was diagnosed with anxiety and depression after the birth of her second child. After seeking help and support, she felt that there wasn't enough for support for those living day in and day out for those with mood disorders. She created the Crush Run, set for Sept. 22, to raise money for the Anxiety and Depression Association of America and bring together a community of people who live with the same conditions she does. (Madelyn Reese/Las Vegas Review-Journal)
North Las Vegas marks the opening of Tropical Parkway connector
The City of North Las Vegas, Nevada Department of Transportation and other partners celebrated the opening of the Tropical Parkway connector to Interstate 15 and the Las Vegas Beltway. The stretch of road will make access easier for distribution centers for Amazon, Sephora and other companies moving into an 1,100-acre industrial area rising near the Las Vegas Motor Speedway. (K.M. Cannon/Las Vegas Review-Journal)
Bighorn sheep with West Temple in background at Zion National Park
A bighorn sheep walks through Zion National Park (National Park Service)
Adult Superstore location closes after 45 years
The Adult Superstore on Main Street has closed its doors for good after 45 years. The shop, which offered a multitude of adult toys, novelty items and movies, opened in 1973. Four other locations remain open. A note on the front door tells customers, “We can’t fully express our sorrow.” Adult Superstore was awarded Best of Las Vegas adult store by the Review-Journal in 2016 and 2017 .
Funeral held for Las Vegas corrections officer
Department of Public Safety Correctional Officer Kyle Eng died July 19 after a fight with an inmate at the Las Vegas Jail. A funeral was held for Eng at Canyon Ridge Christian Church Monday, July 30, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
What Back-To-School Shopping Is Like For a CCSD Parent and Teacher
Laura LeBowsky, a CCSD special education teacher and mother of two, set out to shop for her children's supply lists at her local Walmart and Target. She was looking for deals to try to keep the total under $150, while also allowing Chloe, 8, and Brady, 6, some choice in what they wanted. (Madelyn Reese/ Las Vegas Review-Journal) @MadelynGReese
Businesses struggle to fill food manufacturing jobs
Chelten House is a family-owned food manufacturing company from New Jersey. They created a facility in Vegas five years ago and have struggled to find experienced workers in the area. (Marcus Villagran/Las Vegas Review-Journal)
LeBron heckler crosses line, altercation erupts
NBA superstar LeBron James, his wife, Savannah, and daughter Zhuri were at Liberty High School to watch Bronny James in action Wednesday night. But an unruly fan wearing a Michael Jordan Chicago Bulls jersey heckled the newest Los Angeles Laker. The man screamed at event security with LeBron and his family about 150 feet away. The man had to be restrained, triggering a brief altercation with security. James and his family were escorted out a side door along with Bronny's team, the North Coast Blue Chips. Event officials canceled the game between the Blue Chips and Nike Meanstreets.
Las Vegas Oddities Shop in Downtown Las Vegas
Las Vegas Oddities shop owner Vanessa VanAlstyne describes what's for sale in one of the weirder and wackier stores in Downtown Las Vegas. The store opened less than a year ago and carries everything from human bones to "rogue" taxidermy to Victorian death photography. (Madelyn Reese/ Las Vegas Review-Journal)
Trying to Staying Cool in the Las Vegas Heat
Cooling stations like Cambridge Recreation Center's opened across the Las Vegas Valley this week after the National Weather Service issued an excessive heat warning for the area. (Madelyn Reese/ Las Vegas Review-Journal)
MountainView's nurses protest outside hospital
MountainView Hospital's nurses affiliated with the Nevada chapter of the national Nurses Organizing Committee picketed outside MountainView Hospital Tuesday to urge the hospital to address high turnover rates and understaffing. (K.M. Cannon/Las Vegas Review-Journal)
Excessive Heat Slams Las Vegas This Week
The National Weather Service issued an excessive heat warning for Tuesday, July 24 through Thursday, July 26 in Las Vegas. People are reminded to limit outdoor activity, drink plenty of water and wear sunscreen. Visit weather.gov/heat for more heat safety tips. (Madelyn Reese/ Las Vegas Review-Journal)
Burning car in Las Vegas Spaghetti Bowl
Firefighters extinguish a burning car on the Martin Luther King offramp from northbound Interstate 15 in the Spaghetti Bowl in Las Vegas on July 23, 2018.
Fire Department Issues Warning About Water Safety
Deputy Fire Chief Jeff Buchanan made a public safety announcement about water safety after Clark County Fire responded to 27 calls that were classified as drowning incidents between May 1 and July 20. Clark County Fire, Las Vegas Fire & Rescue and North Las Vegas Fire responded to 55 total calls during the same time. (Madelyn Reese/Las Vegas Review-Journal)
Taxpayer-funded LVCVA boss negotiating exit pay despite criminal investigation
CEO Rossi Ralenkotter is the third-highest-paid public official in the state He has a pay and benefits package valued at $863,000 annually. Ralenkotter does not have an employment contract He announced his retirement in mid June, amid a scandal over airline gift cards LVCVA bought $90,000 in Southwest Airline gift cards between 2012 and 2017. Now auditors can’t account for more than $50,000 of the cards. Ralenkotter and his family used $16,207 in gift cards on 56 trips. Brig Lawson, the senior director of business partnerships, was responsible for buying and distributing the cards. He recently resigned. Ralenkotter's retirement settlement package could cost taxpayers thousands of dollars.
TOP NEWS
News Headlines
ad-infeed_1
ads_infeed_2
Local Spotlight
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like