James’ tax plan runs into trouble

Erin Neff

Wednesday, May 23, 2001 | 10:09 a.m.

CARSON CITY -- Sen. Mark James began lobbying in earnest Tuesday for his plan to increase business franchise fees.

But he ran into the first snag in the Senate Judiciary Committee when two senators from his own party expressed concerns about the proposal.

The plan would establish fee increases for businesses based on a sliding scale based on a company's net worth in Nevada. The fees range from $150 to a capped $50,000 amount for businesses worth more than $51 million.

James, R-Las Vegas, said the fee increases would raise an estimated $65 million annually.

Sen. Jon Porter, R-Henderson, worried that small-business owners would face the brunt of the fee increase because many have enough assets to put them at annual franchise fee level of $700 to $1,410 according to James' scale.

"I think that small business today feels that government is stacked against them," Porter said. "My challenge is that I believe the small guy's going to get hit the hardest."

Porter said that it is easy for a small-business owner to amass $200,000 in net worth, based on ownership of several vehicles and assets. A business with that level of worth would pay $710 annually under James' plan.

James argued his plan is fair to small businesses because about 87 percent of corporations registered in Nevada will pay the minimum $150 fee. He also said 85 percent of the highest fees will be paid by the wealthiest corporations.

Sen. Maurice Washington, R-Sparks, worried that raising the fee could offset any of the proposal's pro-business liability protection provisions. Washington also said he thinks big-ticket items up for consideration this session -- such as the State College at Henderson -- should be reconsidered before a tax is increased.

His colleagues' questions came during a "conceptual discussion" of James' proposal. He has not yet introduced it in bill form on the Senate floor. After the proposal is introduced, it will be referred back to James' Judiciary Committee.

Since the proposal has no bill number, Assembly members and lobbyists crowded the hearing room to pick up a copy of the proposal. The proposal is not yet available on the Legislature's website.

Las Vegas Chamber of Commerce officials objected to the proposal saying their recommendations were not included in James' plan.

The Chamber submitted a four-page statement of position to the committee reiterating that organization's stance all session that taxes should not be raised until a thorough study is conducted during the interim before the next session in 2003.

"We, as the Nevada business community, are hereby committing to develop and define a proposal, which we will present to the 2003 Nevada State Legislature for adoption and passage," the statement reads.

James argues the state's $121 million budget shortfall, coupled with a crisis in education funding, requires the Legislature to act during this session.

Sen. Dina Titus, D-Las Vegas, commended James for his proposal but expressed concern about the liability protection provisions contained within the plan.

James said those provisions are designed to entice more businesses to incorporate in Nevada and raise the revenue estimates.

Titus also worried about "going around the governor" with such a "major change in tax policy."

Gov. Kenny Guinn has called for no tax increases but has not expressed a position on James' proposal in light of May's Economic Forum forecast predicting shortfalls in revenue.

"I'm not just hopefully tilting at windmills," James said. "This has developed from a place where we were that nobody was going to do anything.

"This is in my view -- and I hope to convince you -- the best way for us to go," he added.

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