Guinn supports plan to tax firms from out of state

Monday, May 14, 2001 | 10:26 a.m.

CARSON CITY -- Gov. Kenny Guinn says he supports a newly unveiled tax plan that would affect out-of-state corporations that have no employees in Nevada -- if it's constitutional.

"This is one giant step toward a long-term solution," Guinn said Sunday. "It fits in with my plan not to tax Nevadans this time."

The proposal, he said, has been "talked about since last summer."

Senate Majority Leader Bill Raggio, R-Reno, and Sen. Mark James, R-Las Vegas, who developed the bill, played a role in the discussions, Guinn said.

The legislation, to be introduced this week, calls for a $500 fee on every company that registers with the secretary of state. This includes corporations, limited liability companies, partnerships and others.

Those with employees based in Nevada would get a credit on the business activities tax, which is $100 a year per worker.

James estimated that 132,000 of the 172,000 business entities registered in the state would pay the annual fee, producing $65 million a year.

The governor said he needs to "see something in writing" that levying a higher fee on an out-of-state firm than on an in-state company is constitutional.

In this case, however, the in-state firm is merely getting a credit on its tax bill, Guinn noted. He expects a legal opinion from a private law firm early this week.

Raggio said out-of-state companies pay almost nothing now, and the tax would have no impact on the companies that operate here.

The extra money could be used for pay raises for teachers, Raggio said.

Guinn agreed.

"The biggest hole in my budget was we could not give teachers and other support personnel a raise," the governor said.

He set aside $57.5 million for a one-time bonus of 4 percent to 5 percent for teachers and other school personnel, but that does not raise their base pay. If the new fee is constitutional and it finances teacher pay raises, Guinn said, the $57.5 million might be freed up for other uses.

The new fee, Guinn said, does not solve the long-term financial problem facing the state. His administration produced a study last year showing the state will need an additional $1 billion over the next eight years to maintain the status quo.

He said that in two years there may have to be an influx of $450 million in new revenue. That could come from re-arranging the present tax structure or new taxes.