State ranks 29th in taxes collected per resident

Cy Ryan and Timothy Pratt

Friday, May 3, 2002 | 11:11 a.m.

Nevada collected $1,820 per resident in taxes in 2001, placing it 29th in the nation, according to a Census Bureau report released today on state tax collections.

But the ranking, which may seem high for a state with a reputation for low taxes, may be skewed by Nevada's unique revenue structure, which relies heavily on tourists with its gaming and sales taxes.

About 85 percent of Nevada's revenue, according to the census figures, came from all types of sales taxes, from general sales to alcohol to utilities. Just over 70 percent of that was from the state's share of the sales tax and gaming receipts.

Tourists contribute to those coffers when they gamble in the state's casinos and shop in Nevada stores, a University of Nevada, Las Vegas economist said.

"Not much of the per capita figure is actually falling on local residents," Keith Schwer, director of the Center for Business and Economics at UNLV, said.

That's the state's policy -- to hit tourists hardest, said Dave Pursell, director of the state Department of Taxation.

Guy Hobbs, chairman of the Governor's Task Force on Taxes, estimated the state would be in 40th to 45th place in the nation if the tourist population -- about 40 million a year -- had been accounted for in the census figures.

The Census Bureau report showed Nevada's tax receipts per resident were 8 percent below the national average of $1,968 and far below the nation's leader Connecticut, at $3,092.

However, Nevada collected 40 percent more than the nation's straggler, South Dakota, at $1,292.

South Dakota, like Nevada, has no personal income tax, and it does not collect a state property tax.

Nevada governments are allowed to collect up to $3.64 per $1,000 of assessed values, but the state retains only 15 cents. The rest goes to local governments and schools. The census report counted all of the collected taxes.

"There is a huge discrepancy in what South Dakota takes in terms of their population and what we are collecting from our base," Gov. Kenny Guinn said.

The report, he said, does not have "any relationship to the dynamic growth you have. When you're growing tremendously you need more dollars to build the schools."

Nevada has been the fastest-growing state for the past 15 years, census figures show.

The state surpassed the national average in amount of property tax collected per resident, with $47.06 taken in, compared with $36.70 nationwide.

Schwer said this is in part to the relative wealth of Nevadans.

"We pay more because our homes are worth more," Schwer said.

The census numbers also show a trend in Nevada taxes that is the subject of the Governor's Task Force led by Hobbs.

"The one thing reflected in the census report is a narrow tax base," Schwer said.

"That, together with our state's rapid growth, is the basis for an argument in favor of changing our present tax system, since it's very hard to maintain any tax system over long periods of sustained change."

Ken Lange, executive director of the Nevada State Education Association and a member of the task force, said the census figures show that broadening the tax base will be necessary for Nevada to meet the needs of its future population.

"There's a lot of room to tax our residents fairly without damaging our economy in order to obtain schools, roads, parks and the sort of benefits most of us want," Lange said.

"It's clear that there's room to diversify -- including taking a look at the exemptions in different categories of sales taxes, our low property taxes and roughly $85 billion in untaxed business activity," he said.