Nevada’s tax structure is fundamentally unfair, burdening the poorest residents the most while letting the rich and big business largely off the hook, according to a new study by a local liberal coalition.
The report released today by the Progressive Leadership Alliance of Nevada calls for a top-to-bottom overhaul of taxation in the state to spread the tax burden more equitably.
Chief among its proposals are a new tax on business profits and increasing the amount paid by mining companies. Along with other reforms, the group says its recommendations would generate nearly $1.3 billion for the state’s general fund, monies PLAN says are needed to shore up education and state services.
“Nevada’s tax system is not just broken, it’s also fundamentally unfair, balancing the state budget on the backs of those who can least afford it while shielding some of the state’s biggest, and most profitable, businesses from any meaningful taxation whatsoever,” the report contends.
As the Legislature prepares to convene facing a massive budget shortfall due to plummeting revenue, the group says it is time to increase taxes rather than continuing to cut state services that it says are already insufficient.
State revenue is overly dependent on sales and gaming taxes. The former hit poor families the hardest, while the latter are highly unstable, PLAN says.
Meanwhile, certain industries are barely taxed at all, like construction, which makes up 9.3 percent of the state’s gross production while paying 1.1 percent of its taxes.
Services, manufacturing and mining similarly pay disproportionately low rates, while entertainment and sales, both wholesale and retail, pay much more than their share in taxes, the report concludes.
One remedy for this, according to the report, would be to institute a tax on businesses’ net profits, which nearly all other states impose. PLAN suggests a 5 percent tax on businesses with profits of $50,000 to $100,000 and a 7 percent tax on profits of $100,000-plus, which the group estimates would bring in $194 million in revenue.
The massive multinational mining corporations that are doing booming business in the gold mines of Northern Nevada deduct everything from insurance to marketing from their gross production revenue, so that some years they report zero net proceeds, the report finds. The mining industry, according to the report, experiences an effective tax rate of 0.5 percent.
By tightening the rules on allowable deductions, the state would generate an additional $141 million annually, the report states.
Other recommendations in the report include:
* Doubling the modified business tax, from 0.63 percent to 1.26 percent, for $279 million in annual revenue;
* Requiring casinos to pay sales tax on comped meals, generating $140 million per year in taxes;
* Increasing the hotel room tax by 3 percentage points, a measure proposed by the teachers union and approved by voters in Clark and Washoe counties in the November election, which would bring in an estimated $125 million annually;
* Charging a 3 percent tax on capital gains, interest and dividends over $200,000 per year, raising $380 million in new revenue.
Contact reporter Molly Ball at email@example.com or 702-387-2919.
PLAN tax analysis