More taxes on mining would harm Nevada

Tax policy in Nevada needs to move beyond “Who are we going to get this legislative session?” In years past, we have gone after gaming and banking, and now mining with ballot Question 2, the Nevada Mining Tax Cap Amendment.

I contend we should shift from this whack-a-mole approach to one that considers a cost-benefit analysis of how our tax base is currently structured.

When you consider major taxes paid per employee by industry, natural resources and mining tops the list in Nevada at $9,893 for sales and use tax, property tax and gaming percentage fees (Applied Analysis 2012). Add in the net proceeds of minerals tax and that number jumps to $24,775. Focus only on the metal ore mining sector and major taxes paid per employee increases to approximately $33,000. That number is significant, because it is more than five times the average for all industries in Nevada.

We are also talking about an industry in which the average annual salary in Nevada is $88,000, or more than double the average reported across all sectors statewide. The mining industry in Nevada pays nearly $1 billion in annual salaries to Nevada workers and, at only 5.3 percent of our gross state product, is responsible for 14 percent of all job growth in Nevada since 2009.

Why does this matter? Because in addition to being a major source of revenue for state and local governments, mining industry employees can afford to buy homes, pay their mortgages, pay for their health care and pay for the necessities of life, without government assistance.

Add to all of this another important fact: mining industry employees are not a burden on our public safety system and health system, because the industry utilizes robust drug and alcohol testing and safety procedures as predicates to being hired and continuing employment.

All of these positive attributes add up to the conclusion that this industry, without factoring in charitable contributions throughout the state, is in every sense of the word paying its own way and then some when compared with its impact on funding state and local operations.

Unfortunately, mining is not well understood in the urban counties of Nevada. It has been and continues to be the life blood of many Nevada rural communities. In fact, mining existed before we became a state.

When Nevada’s constitution was adopted in 1864, the importance of mining as the only industry in the state was acknowledged in Article 10. That provision recognized that burdensome taxation would diminish the benefits the industry would ultimately provide — and which we still see today.

Many Nevadans have little or no idea of the years required and the millions of dollars in capital necessary to endure the permitting process and undertake exploration. The mineral wealth of our state and the outsized economic benefits we derive from it are worth nothing if we cannot develop it. And that expense is one that government at any level is not willing or able to bear.

It is also important to consider that the price of gold is not set by the industry, but on world economic conditions and is subject to major swings from high to low. Removing the constitutional provision, as proposed in Question 2, would potentially allow the creation of a tax scheme that effectively could shut down mines when the price of gold is low.

This would create hardships for those communities that depend on mining for their livelihoods, to say nothing of the impact on local governments — including schools — from the loss of revenue.

What kind of state taxation policy levies revenues on a commodity? In the past 18 months, gold has lost nearly a third of its value.

We are lucky to have an industry that pays the wages and taxes this industry does. Passage of this scheme would make its continued presence in our state tenuous. Last time I checked, $88,000-a-year jobs plus tax revenue are the hallmark of a good industry to have in our state.

Vote no on Question 2.

Mark Amodei, a Republican, represents Nevada’s 2nd Congressional District in the U.S. House of Representatives.