The tax base

Nevada lefties who continue to bang the drum for new levies under the guise of "stabilizing the state's tax base" may want to consider the experience of our neighbor to the north, Oregon.

But probably not.

In January, Oregon voters approved big hikes on "the rich," jacking up the state's corporate and personal income tax rates. Individuals who earned more than $125,000 endured a 20 percent tax increase, while those making more than $250,000 suffered a 22 percent hike. Corporate rates jumped as much as 1,400 percent.

But just seven months later, reports the Heartland Institute's August issue of Budget and Tax News, Gov. Ted Kulongoski, a Democrat, has ordered 9 percent across-the-board cuts for state agencies because the anticipated revenue from the tax hikes has fallen far short of projections -- the hole is expected to reach $577 million by next July.

Not only is this another classic example of how individual wage earners adjust their behavior in order to minimize their tax burdens, it again highlights how calls to "stabilize" Nevada's tax base through the creation of a state or corporate income tax would likely have the opposite effect.

As Budget and Tax News points out, Standard & Poor's recently noted that it gave the state of Washington a relatively high bond rating because it relies primarily on sales taxes for revenue which, while subject to economic cycles, gives that state a more reliable money stream than states more dependent on personal or corporate income taxes.

Ironically, the paper notes, those behind an effort to impose an income tax in Washington state "are blaming (the state's) budget deficit problems on a revenue structure that is too reliant on sales tax collections."

Does any of this sound familiar? It should.

It has been an article of faith among Nevada liberals that the state's reliance on sales and gaming taxes makes it more susceptible to economic downturns. According to this line of thinking, if only Nevada had a corporate income tax or a business activities tax or even a personal income tax on the rich (currently prohibited under the state constitution), the slumps would be eliminated and our budget woes solved!

But as the experience of other states attests over and over again, it's a delusional fantasy. Which might lead a cynic to believe that "stabilizing the tax base" isn't really the issue -- it's simply a matter of tapping a vast new pool of privately created wealth for Carson City to plunder.

Perish the thought.