A real tax study

For more than two decades, legislative Democrats have complained that Nevada’s budget woes are a result of an outdated and unstable tax code. They’ve claimed that taxes need to be “restructured” to spare state services from future drastic spending cuts.

Of course, they’ve done nothing to accomplish this. Instead, they’ve raised existing taxes and avoided any formal debate on “revenue reform” — thus revealing the term as political code for massive tax increases.

Enter the Nevada Policy Research Institute, a fiscally conservative think tank. This week, the group answered the challenge from Democrats, proposing reforms in how Nevada raises money for its general fund, which covers education, social services, welfare and public safety. And it did it in a way that’s revenue-neutral.

NPRI proposes cutting the state sales tax rate from 6.85 percent to 3.5 percent (a figure that doesn’t include county sales tax collections), and expanding its application to all goods, including food, and services, including utilities. The plan would eliminate the punitive payroll tax, which is a disincentive for employers to create new positions and give current workers pay raises, and the insurance premium tax.

According to NPRI’s projections, this restructuring would produce about the same amount of revenue over the next two years as the state’s current tax code. NPRI’s analysis also gets at the heart of the state’s budget problems — out of control spending — by suggesting a new budgeting process and spending caps.

Legislators are scared to death to discuss such ideas around an election. They created an unelected, unaccountable “study” panel — the Nevada Vision Stakeholders Group — to make budget recommendations and reorganize the state’s priorities. All signs point to a very expensive wish list coming from this tax-hiking front.

NPRI also proposes establishing a bureaucracy to provide some rebates to all taxpayers to ease the new burden put on paying for life’s necessities. That sounds needlessly complicated. If the state has to give some money back, it shouldn’t collect it in the first place.

But NPRI’s study (which can be read at www.npri.org) is of great value because it launches the debate Democrats should have started years ago — just in time for the primary and general elections. Voters should ask legislative candidates for their positions on NPRI’s suggestions.

If they reject the ideas out of hand, it’s a signal that they don’t really favor “stabilizing” the tax base, they simply want newer and higher taxes — just what Nevada’s economy can ill afford.

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