3 Democratic state senators propose alternative tax measure

CARSON CITY — Three Democratic state senators pushed an alternative tax plan to Gov. Brian Sandoval’s business license fee proposal Tuesday, calling their measure simpler, fairer and broad-based.

But Republicans on the state Senate Committee on Revenue and Economic Development were unconvinced of the claims and raised concerns that provisions of the bill could leave state coffers vulnerable at a time Nevada is groping for a stable tax structure and increased revenue to improve public education.

State Sen. Pat Spearman, D-North Las Vegas, took the lead in presenting Senate Bill 378.

“Less than half a penny. That’s what we’ll be talking about in this presentation,” said Spearman, the primary sponsor of the measure along with fellow Las Vegas Democratic state Sens. Mo Denis and David Parks.

According to calculations, the bill would raise nearly $1.4 billion over the upcoming biennium.

It seeks to repeal the modified business tax on general businesses, a levy paid on payroll that currently generates $400 million a year.

Financial institutions would still be subject to the payroll tax at a 2 percent rate, and mining, which currently pays the tax at 1.17 percent, would be assessed at the higher percentage. The bill also seeks to strip the mining industry of deductions for employee health care costs when calculating net proceeds taxes on minerals.

Annual business license fees would remain at $200 for most businesses, but would be double for businesses that do not perform a service or engage in trade for profit in Nevada.

Abruptly cutting the payroll tax revenue cord gave some committee members pause.

“To eliminate $800 million in one fell swoop … it’s a little risky. More risky than I’m comfortable with,” said state Senate Majority Leader Michael Roberson, a Henderson Republican and chairman of the Revenue Committee.

The bill would also impose a new “supplemental fee” to be paid quarterly that would amount to $50 plus 0.465 percent of gross receipts that exceed $25,000 per quarter or $100,000 annually.

Roberson and state Sen. Greg Brower, R-Reno, questioned the fairness of imposing a uniform tax rate on all businesses without regard to the nature of their operations, such as labor intensity.

“I do think this is pretty simple, and I do think it broadens the base,” Roberson said of Spearman’s bill. “I’m just not convinced it’s fair.”

Sandoval’s plan contained in Senate Bill 252 would revamp the state’s business license fee structure based on gross receipts. The bill, which was detailed in hearings that spanned three days, would impose varying rates on 30 different industry categories and amounts of revenue.

SB252 is the cornerstone of the governor’s plan to raise $1.1 billion through new and extended taxes to fund his education agenda.

Other tax bills also have been introduced in the Legislature but have not yet been considered.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb.