Myth at heart of margins tax debate

While the debate over Question 3, the margins tax initiative on this fall’s ballot, will rage until Election Day, the sides have settled into two predictable camps.

The Nevada State Education Association union — the only significant group supporting the tax — claims that education needs more money. And to make that happen, it’s hoping to persuade voters to rob Peter to pay Paul.

The opposition — including Gov. Brian Sandoval, most legislators, the AFL-CIO, Farm Bureau, Culinary union and Las Vegas Metro Chamber of Commerce — says education needs more money, but that the margins tax will kill thousands of jobs, damaging the ability of parents to provide for their children.

Even if Question 3 passes, they note, education funding could actually decrease. Because the margins tax is a tax on receipts, not profits, it will put struggling business owners out of business. Numerous business owners have shared stories of how the tax would force them to close their doors.

Others point out that the initiative is so poorly written that it could force competing businesses to file a joint tax return.

Scariest of all is that, were the initiative to pass, its numerous drafting errors couldn’t be modified by the Legislature for three years.

NSEA hasn’t been able to counter the economic arguments against the tax and is desperately trying to dismiss issues about how poorly written it is by resorting to mutterings about big businesses.

So voters are presented with a pick-your-poison choice: Vote yes to destroy the economy, put yourself or your friends out of work, but have a chance to increase education spending, and by implication, educational results. Or vote no to preserve Nevada’s fledgling economy and your job, but leave education funding at its current levels, and presumably, at its current levels of low achievement.

But it’s a false dichotomy.

Nevada has tried for decades to increase student achievement by spending more, as seen in statistics from the state and federal government. Nevada has increased its expenditures on public elementary and secondary education from $87.27 million in the 1969-70 school year to a staggering $3.68 billion in the 2010-11 school year.

Even after adjusting for inflation and enrollment growth, Nevada’s inflation-adjusted, per-pupil spending has nearly tripled in the past 50 years. During that time, student achievement declined and Nevada’s graduation rate sank to last in the nation.

Nevada’s efforts to increase achievement through spending are even more dramatic than those numbers suggest. As the Review-Journal’s Glenn Cook reports, our worst schools, on average, receive thousands of dollars more per student than Nevada’s highest-rated schools.

And when you include the billions of dollars the Silver State has spent on buildings and debt, Nevada’s per-pupil education spending is actually higher than most neighboring states.

So why hasn’t more money increased achievement? Two recent incidents at the Clark County School District show why.

First is the district’s poor leadership, which is chronically hostile to the public for whom it works. District officials recently held closed-door meetings to discuss teaching masturbation in kindergarten — only opening the process after enormous public pressure. Then they attempted an end-run around public accountability by splitting a lawsuit settlement check to prevent it from coming before school trustees in a public vote. The settlement — $100,100 paid to remove School Board President Erin Cranor from personal liability in a lawsuit after she personally intervened to stop payment to a district vendor — was split into two checks so that it did not meet the “over $100,000” criteria for school board approval.

Giving the school district more money won’t change its inadequate leadership. It would only give it more power. It would be the inverse of how parents teach their kids responsibility: “Mess up in the small things, and the government will reward you with additional funding.”

Second, even when leadership is outstanding, Nevada’s collective bargaining laws give government unions first crack at any extra funding. Earlier this month, the school district approved $54 million in pay increases favoring its most senior teachers, even though it desperately needed to provide signing bonuses to attract new teachers. These pay increases — not tied to teacher performance — would only get larger with additional funding. The school district would just end up paying more for no improvement.

So how does a myth this big gain traction?

Essentially, the state has been inundated with lies. For instance, the margins tax supporters’ first TV commercial states, “For decades, politicians and big businesses have done nothing to increase education funding.” As the numbers above show, that’s false in every way.

Margins tax supporters, on their website, claim that “education in Nevada has suffered through $700 million in cuts since 2009.” But that’s also false. State education funding is at its highest level ever.

Question 3 presents voters with two stark choices, but neither choice will increase student achievement.

Improving education will only come from legislation — or an initiative — that passes genuine, powerful reforms. Opportunity scholarships, for example.

Improvement won’t come from an initiative designed to channel more money into the hands of secretive bureaucrats, union bosses and a broken education system.

Victor Joecks is executive vice president of the Nevada Policy Research Institute, a nonpartisan, free-market think tank. For more, visit npri.org.