CARSON CITY — A coalition of activists Wednesday proposed a corporate profits tax and a sales tax on services to stabilize Nevada’s tax structure and generate hundreds of millions of dollars for education and social services.
The proposal by the Progressive Leadership Alliance of Nevada comes as the state budget battle heats up and a day before Democratic legislative leaders are expected to forward their own plan to raise taxes, a prospect Republican Gov. Brian Sandoval and GOP lawmakers oppose.
Sandoval has said he will veto any bill containing a tax or fee hike and reiterated his position in a televised speech Tuesday night. He also said he would add back $242 million to K-12 education based on higher-than-projected tax forecasts, but added that while Nevada’s economy is showing signs of improvement, it’s still fragile.
The governor said businesses are still struggling and “cannot afford a tax increase or further intrusion by government.”
Nevada relies heavily on sales and casino taxes — two sources pummeled by the recession — to fund government services. Lawmakers, economists and some business groups for years have called for a broader and more stable tax base, but the concept has never gotten out of the starting block.
PLAN proposed replacing the state’s current modified business tax that is calculated on employee wages with a corporate profits tax that could be set with exemption levels.
“We don’t want to hurt small businesses,” said Jan Gilbert, a coordinator with the alliance.
The group’s study estimated that substituting a corporate income tax for the payroll tax could generate $98 million to $476 million a year, depending on exemption cutoffs.
Expanding Nevada’s sales tax to include some services could bring in another $792 million, while revising the net proceeds tax paid by mining companies could fetch another $197 million, the report said.
Battle lines over Sandoval’s proposed budget, now estimated at $6 billion, have been taut since the session began Feb. 7. But with lawmakers facing a constitutionally mandated deadline of June 6 to adjourn, a continued stalemate probably will result in a special session.
Democrats hold slim majorities in the state Senate and Assembly but lack the clout to pass tax increases or override a governor’s veto. Likewise, Republicans cannot pass a budget without support from some Democrats.