Tax business income

To the editor:

Gov. Brian Sandoval is correct when he reminds the Legislature that, during this economic crisis, businesses that are struggling to exist do not need more taxes imposed upon them.

Senate Majority Leader Steven Horsford is also correct reminding legislators that Nevada has a “regressive tax system.” Actually, Nevada’s tax system is among the most regressive in the nation for businesses and individuals.

The concerns of both the governor and Sen. Horsford could have been avoided if our Legislature had established a progressive business income tax while simultaneously eliminating the regressive, Band-Aid taxes and exorbitant fees that have been imposed upon businesses. Regressive, Band-Aid taxes and exorbitant fees hurt struggling businesses because they must pay them even though these businesses might not be making money. With a business income tax, a business that has no income pays no income tax.

On the other hand, large prosperous businesses that generate huge earnings in our state — and ship those earnings out to their home offices out of state — would pay significant taxes, as they do in every state bordering ours.

In the 2003 session of the Legislature, lawmakers were informed that a single Home Depot store in California generates more than 50 times greater tax revenue than a similar Home Depot store generates in Nevada. Yet — contrary to what many conservative gurus argue — Nevadans pay the same price for goods purchased at a Home Depot in Nevada as Californians pay at a Home Depot in California. Nevadans get no discount from Home Depot because Nevada’s business tax is negligible.

In effect, Nevadans are subsidizing California customers of Home Depot and most other large chain stores. In the states surrounding Nevada, every state has a business income tax, so we are also subsidizing chain-store customers in Oregon, Idaho, Utah and Arizona as well as California.

No wonder Nevada has a larger budget deficit, per capita, than any of these surrounding states.

Unfortunately, a business income tax cannot be the sole solution to the current problems because it most likely could not be implemented in one year. But perhaps the revenue needed immediately could be begged, borrowed or bonded — using anticipated future revenues from a newly enacted business income tax for retirement of said “loan.”

Incidentally, the management of a business income tax is not as difficult as has been represented. Most states — in cooperation with the IRS — simply collect a percentage of the obligation owed to the IRS, and then the IRS gives the business a deduction for the money it pays in state income tax.

That’s a win-win situation for Nevada businesses and Nevada.



The writer, a Democrat, served seven terms in the state Assembly.

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