Where I Stand — Mike Sloan: Taking advantage of us

Friday, Aug. 29, 2003 | 5:52 a.m.

Editor's note: In August the Where I Stand column is written by guest writers. Today's columnist, Mike Sloan, was a member of the Governor's Task Force on Tax Policy. Sloan also is a senior vice president for the Mandalay Resort Group.

AS I WAS RETURNING to Las Vegas from visiting my new granddaughter in Alabama a couple of weeks ago, two things occurred that made me reflect on the missed opportunity of the last legislative session. The first was a chance reading of an Alabama newspaper, which told of the Republican governor's courageous efforts to shift the tax burden in Alabama from the poorest citizens to big business and the state's wealthiest citizens.

Gov. Bob Riley, a former five-term congressman and longtime follower of Newt Gingrich, is telling people in his state that many businesses are getting a free ride and not paying their share of taxes. "I believe in a fair tax code, they don't," Riley told a local Rotary Club recently, adding, "they have had special treatment at least for all of my adult life."

Alabama has low personal and corporate income tax rates and one of the lowest property tax rates in the country, although its effective tax rate of the poorest residents is about 12 percent according to the governor.

Asked why he is supporting this tax increase, Riley simply says, "I'm tired of Alabama being first in everything bad and last in everything good." It takes money to fix schools, pay teachers, police and firefighters and to provide social services.

To many of us in Nevada, particularly those of us who served on the Governor's Task Force on Tax Policy created by the Legislature to recommend methods of broadening the tax base to reflect the diversity of our economy, this story has a very familiar ring.

The second thing that happened on my trip home was a chance encounter with a businessman who boarded the plane in Phoenix on its way to Las Vegas. As we chatted, he remarked that he had just moved to Las Vegas but still maintains his business interests in Arizona.

The reason for his move? He didn't want to pay Arizona personal income taxes, or the much higher property tax in Phoenix. We talked awhile, and he admitted that he was getting a "free ride" but added that he didn't need schools or social services because he had already raised his kids. When asked about his "share" of the cost of roads, flood control, police and fire services, he said those things seem to get provided just fine without him having to pay.

My traveling companion is like thousands of people who have moved to Southern Nevada in recent years. According to the news accounts, tens of thousands of upper middle-class people from California and other states have moved to Nevada because they were tired of paying high taxes. Yet they arrive here and still want services, roads, schools and all the rest. The same news accounts describe how Las Vegas has become the fastest-growing retirement community in the nation, due in large measure to Nevada's low tax rates. Yet these people also want governmental services.

We all know the need for new revenue is driven by growth -- new roads, new schools, more teachers and the rest. States such as Wyoming and South Dakota don't need much in the way of new revenue -- they simply don't grow. In the past decade, Nevada's population has exploded, increasing by more than 60 percent. During the same period the population in those other two states increased by less than 10 percent.

The fact of the matter is government, be it at the national, state or local level, needs tax revenue to provide services. It is no accident that 45 out of 50 states have business income or revenue taxes, and that more than 90 percent of all states have personal income taxes as well as property taxes higher than Nevada.

The tax policy task force created by the Legislature recommended a plan which sought to spread the tax burden among those best able to pay it, while seeking to minimize the burden on homeowners and middle class residents who already pay their fair share. The proposal for a new business tax exempted 60 percent of all business in the state -- those making less than $350,000 a year.

The plan sought to get the biggest businesses, many of which are headquartered out of state but make millions of dollars in profits in Nevada each year, to pay a "business tax" here just like they do everywhere else -- the only difference being that we asked them to pay much less here than in those other states. Banks, developers and retailers were among those that the task force thought should be asked to shoulder some of the new burden, particularly since they have paid so little for so long.

The governor of Nevada and a clear majority of the Legislature agreed with this concept of asking big business to join the gaming, mining and insurance industries in helping fund state government. Some businesses, including major home builders and the cable industry, stepped up and agreed to pay a tax on their revenue. Unfortunately a minority of legislators blocked passage of the tax plan, with one of the ringleaders saying he didn't care if state government, including the schools, closed down or not.

In Alabama, Gov. Riley goes about his "lonely" task of trying to get approval for new revenue, telling the people of his state it is their "Christian duty" to provide for the less fortunate.

As someone who has lived in Las Vegas for nearly 50 years, I think we Westerners might tell our new citizens and business leaders it's their "neighborly duty" to pay their fair share of the tax bill driven by growth. Otherwise, maybe we should follow the lead of Oregon, where for years the locals put bumper stickers on their cars saying "Thanks for visiting, now go home."