Study: Tax burden of Las Vegans is minimal

Friday, May 19, 2000 | 11:23 a.m.

A new study by a Wisconsin consulting firm revealed that Las Vegas homeowners and renters pay among the nation's lowest taxes because there is no state or local income tax.

In a comparison of four-member households that earn $60,000 annually, Las Vegas homeowners on average pay $12,242 in federal, state and local taxes, making up 20.4 percent of their income. Nevada renters with the same income and family size pay on average $11,560 in taxes, or 19.3 percent of their income.

Those numbers, compiled by Runzheimer International, ranked Las Vegas homeowners and renters 48th and 42nd lowest respectively among the 51 largest metropolitan areas in each state and Washington, D.C. Runzheimer, founded in 1933, studies living, travel and transportation costs.

The tax findings came as no surprise to Scott Scherer, who is Gov. Kenny Guinn's chief of staff, and Carole Vilardo, president of the Nevada Taxpayers Association.

"That's why we have a lot of retirees moving to Las Vegas," Scherer said.

These rankings are far more favorable toward Nevada than a 1998 Census Bureau comparison. The census ranked Nevada 15th highest in terms of taxes the state collects on average from each resident.

The difference between the two studies is that the census figures included taxes such as on gaming revenues and business licenses. Those and other business-related taxes are not included in the Runzheimer report because they are not direct taxes on homeowners or renters.

When state political and economic experts were asked to comment about the census rankings they complained that the numbers were skewed because much of Nevada's overall tax burden is shouldered by out-of-state tourists.

Vilardo said she believes the way Runzheimer prepared its study is a more accurate reflection of taxes paid by individuals than the way the census numbers were compiled.

"Depending on how you calculate taxes it will either put us at the bottom or the top," Vilardo said of Nevada. "The reason we have been able to maintain a low individual tax burden is because of the burden on individual businesses such as gaming and mining."

Runzheimer client operations director Art Balicki compiled the study by combining federal taxes using standard deductions, Social Security taxes, sales taxes based on about 160 consumer goods and services, state and local income taxes, property taxes, and vehicle registration.

Balicki said Las Vegas households in his study average $4,590 in Social Security taxes, $1,285 in sales taxes and $218 in vehicle registration costs. Local homeowners average $4,266 in federal taxes and $1,883 in property taxes, and renters average $5,467 in federal taxes. Balicki said homeowners average less than renters in federal taxes because of deductions for home mortgages and property taxes.

The Las Vegas homeowners' average of $12,242 in taxes compares to a high of $16,362 in New York City and a low of $11,342 in Casper, Wyo. The Las Vegas renters' average of $11,560 compares to a high of $15,311 in Louisville, Ky., and a low of $10,145 in Anchorage, Alaska.

"The New York area has some of the highest property taxes in the country, among the highest state income taxes, a hefty sales tax, and a local commuter tax for the 'honor' of working in Manhattan," Balicki said. "True, you get to deduct property taxes and state income tax off your federal return, but this just eases the pain and does not make up the difference."

Noteworthy is that Las Vegas and the other metropolitan areas where there are no state income taxes -- Dallas, Seattle, Miami, Casper, Anchorage and Sioux Falls, S.D. -- all ranked in the bottom quarter of the nation in terms of tax burden.

Balicki said the property taxes in Las Vegas are also lower than most other cities in his study. He said the relatively low taxes "is definitely an influence" in the decision of individuals to move to Southern Nevada from out of state.

"From both the homeowners' standpoint and renters' standpoint I'd be very happy with the Las Vegas rankings," Balicki said.

Nevada, however, faces a potential long-term budget shortfall if it does not do something to change tax policy or expenditures. That was the conclusion of a Fiscal Forum Guinn hosted in Las Vegas earlier this month.

The Guinn administration plans to decide this fall whether it will propose a change in tax policy to be considered by the 2001 Legislature. One idea the governor has floated but not yet adopted is to tax services used by consumers. There are also petition drives to raise business taxes and the taxes large casinos pay on gross gaming receipts.

Steve Kanigher is a staff writer for the Sun. He can be reached at (702)-259-4075 or by e-mail at steve@lasvegassun.com.