Statistics and Nevada’s tax burden

UNR professor Elliot Parker, a teacher of economics, presented his case last week for more tax hikes, without which Nevada will not be able to hire more government employees and give them higher wages.

Parker cited statistics from the U.S. Census Bureau’s “Statistical Abstract of the United States” and the Tax Foundation to convince readers that Nevada’s people have been terribly chintzy when it comes to funding government, particularly as compared to other states. We have so underfunded government, he implies, that it would be a mistake to allow government taxing and spending to contract as Nevada’s economy is contracting.

In fact, the data from the authorities that Parker cites do not support his conclusions. Purposefully or not, he has chosen a narrow subset of larger bodies of data to lead readers to an incorrect conclusion.

For example, Parker cited the statistical abstract as finding “only 5.5 percent of Nevadans work for the state or local governments, the lowest share in the 50 states by far.”

This is probably a true statement, although since the Statistical Abstract of the United States is very large, with more than 750 tables, Parker owes his readers a more detailed attribution.

However, the very same authority (the statistical abstract) also says our government employees are paid the fifth highest of all states (in table 448 column M) in 2006, the most recent year reported.

These average wage numbers — in which Nevada ranks the sixth highest state — do not reflect Nevada’s exceptionally generous benefits package.

All of Nevada’s government employees participate in perhaps the only “defined benefit” retirement plan found in the entire state, public or private sector. And while private sector workers help fund the cost of their retirements with paycheck contributions (that’s what that 6.2 percent deduction for FICA is on your paycheck) the same is not true for local government and school employees in Clark and Washoe County. They have no paycheck deduction to help fund their retirement.

So, for a given wage, they take home a bigger paycheck — not just compared to Nevada’s private sector workers, but also compared to most of the government employees in the five states that outrank us on the Census Bureau’s tally of average pay. (The rest of Nevada government employees, by the way, fund half of their own retirement plans out of their paychecks but it’s approximately 10 percent rather than 6 percent).

If you factor in how government retirement works in, we’d likely rank higher than sixth.

Nevada’s “structural deficit” lies in giving government unions too much power, which has resulted in our having the fewest government employees per thousand residents (dutifully reported by Parker) who are paid at or near the top of America’s government pay scale (incredibly omitted by Parker). To report just one of these statistics without reporting the other is misleading.

Parker next rambles down the taxes-per-capita path without attributing his statistics: “Adding in spending by local governments, Nevada ranks 48th in government spending as a share of income.”

Since the statistical abstract does not explicitly calculate this, he owes us a peek at the bar napkin he scratched his out on.

Bear with me while I show you mine: Statistical Abstract of the United States, Table 424, column B (Total revenue by state for 2005) divided by Table 12, column AK, (2005 population estimates, which appear to be slightly overstated for Nevada) equals tax revenue per person. Nevada ranks 29th, at $7,868 per person.

Since this clearly does not support the “chintzy Nevadans” refrain, and since Nevada’s historically modest government has not surprisingly produced a society with a robust economy, low poverty and high incomes, Parker decided to express tax revenue as a percentage of our statistical average incomes. The Statistical Abstract’s Table 684, column M comes close, with family median income by state for 2006 (not quite average income for 2005, but it’s close).

And Nevada ranks 42nd, ahead of eight states. Not 48th.

Parker finishes up with the now almost-legendary deception that “The Tax Foundation reports that Nevada has the next-to-lowest tax burden in the nation, just slightly above Alaska. That ranking is roughly where we have been since the 1970s.”

That’s just one part of the Tax Foundation study released earlier this year. The foundation also found that our low level of taxation on residents is countered by one of the nation’s highest levels of taxation on non-residents (or, in our local terminology, tourists). Overall, the Tax Foundation ranked us 25th for total state and local spending per capita.

Parker’s subtle sins of omission are followed by a couple of statements that were simply false: “There are also many things the private sector cannot efficiently provide. Like national defense, affordable and available public education is one of these” and, “Unlike most other states, Nevada has no private universities, so this is an important responsibility.”

Of course the private sector can efficiently provide education. In Las Vegas, for example, Faith Lutheran’s middle school tuition was $7,260 in 2006 including capital costs and debt service; that same year, Nevada public school “per-pupil” funding was $7,345 not including capital costs and debt service.

And there are a growing number of private colleges in Nevada, including: Touro College, Sierra Nevada College, DeVry University, National University, ITT Technical Institute, University of Phoenix, Morrison University, University of Southern Nevada, with my apologies to the many more I don’t have space to list.

Bob Beers, a former Republican state senator, served in the Legislature for 10 years. He writes from Las Vegas.

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