Taxpayers association assails teachers’ revenue plan

Wednesday, April 26, 2000 | 9:37 a.m.

CARSON CITY -- The Nevada Taxpayers Association says the business tax proposed by a schoolteachers' union could result in the levying of a second tax on top of the first.

The association Tuesday said a survey of its board of directors showed "overwhelming opposition" to the initiative petition for a 4 percent business profits tax. The association said the petition could result in unintended negative consequences.

Fred Gibson, chairman of the board of the taxpayers association, said one section of the teachers' initiative "contains an extremely onerous provision, which would be extremely detrimental to other state agencies and programs, which rely on revenue support for the state's general fund."

The petition, Gibson said, requires 50 percent of the tax revenue received by the state to be used for public schools. At present, 35 percent of the state's revenue goes to support kindergarten through the 12th grade.

Gibson said raising the education share to 50 percent would mean other state agencies would suffer with a smaller amount of money available and that "will most probably lead to the need for additional tax increases ..."

But Al Bellister, the financial expert for the Nevada State Education Association, said Gibson "has missed the point." The business tax, he said, will raise about $250 million a year. This would be added to the current state allocation to the public schools. That means the two combined would be more than 50 percent and still leave the same amount of money for other state agencies.

Gibson also said earmarking the tax for education only is poor fiscal policy.

"The earmarking of revenue should only occur when there is a direct user-benefit relationship," he said.

Bellister said much of the state's revenue is already earmarked for special purposes. The estate tax goes to schools and the University and Community College System of Nevada.

There is a direct benefit, Bellister said, because the money will be used to educate the children who will become the workforce for the business people who would be taxed.

Carole Vilardo, president of the taxpayers association, cited other problems with the initiative petition. She said Nevadans who earn income from rent, royalties, trusts including family trusts, family limited partnerships, estate and family farms and report that income on schedule E of federal form 1040, would be defined as a business. And they would be subject to the tax if they earned more than $50,000 in profits.

Even if they earned less than $50,000, Vilardo said, they would potentially be subject to an audit by the state.

Vilardo said there is an "inherent danger of taxation by initiative ... creating provisions that have intended or unintended negative consequences that cannot easily be corrected." She said if the business levy is passed, the law could not be changed for three years.