EDITORIAL: Tax incentives
The Nevada Legislature was really, really interested in cleaning up and scaling back tax exemptions and abatements — before it passed more of them.
A report issued Monday by the Nevada Department of Taxation says the state has 243 exemptions that deprive it of about $2.2 billion per year in revenue. The study resulted from legislation sponsored last year by then-Assembly Speaker Marilyn Kirkpatrick, who clearly hoped to tighten up some of the breaks as part of a new charge at tax reform next year.
Some of the exemptions are good tax policy. For example, not applying the sales tax to necessities such as food and utilities. Industry-specific giveaways, however, are not good policy.
But before lawmakers could start closing loopholes, they made them bigger. In a September special session, they unanimously approved up to $1.3 billion in sales, property and payroll exemptions and abatements to lock down a Tesla Motors battery plant for Northern Nevada. The legislation that provided those breaks also gives North Las Vegas the ability to extend incentives to companies that make huge investments in Apex, northeast of the valley. Now that Nevada is on the handout map, other companies will come calling.
So will the abatement gamble send Nevada’s economy soaring or blow holes in government budgets across the state, forcing higher tax burdens on less-powerful constituencies? Hopefully, the 2015 Legislature can hold the line on abatements until we find out.