Kids may suffer consequences of taxes, expert says

Tuesday, Jan. 14, 2003 | 11 a.m.

Low-income Nevadans who stand to benefit the most from increased state funding aimed at children could see those gains wiped out by potential new and increased taxes, a UNLV economist said Monday.

At a child care conference in Las Vegas, R. Keith Schwer said he expects child care advocates to be among those who will keep a close eye on how Nevada lawmakers address the state budget shortfall.

"Children's issues are back on the table as a priority in terms of how we will raise our revenues," Schwer said.

Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, doubles as executive director of Nevada Kids Count, a nonprofit advocacy group that compiles statistics related to children.

"Nevada now finds itself in the top 10 of those states with regressive taxes," Schwer said. "If the taxes hurt low-income people, we will with one hand add money to the system and with another hand take it away."

Nevadans who rank among the lowest 20 percent in wages pay more than 8 percent of their income for state and local taxes, according to a federal study. The top 1 percent of Nevada earners pay only 2 percent of their income for state and local taxes.

Schwer said proposed increases in property taxes and a proposed new 6.5 percent tax on entertainment such as concerts and sporting events are examples of levies that would be progressive. Property taxes usually are based on the relative wealth of the taxpayer whereas tourists would be expected to contribute a large portion of entertainment tax revenues.

Examples of regressive tax proposals include a possible new gross receipts tax, a proposed doubling of state cigarette taxes and potential expansion of the sales tax base, he said.

The proposed one-quarter of 1 percent gross receipts business tax, the largest potential revenue generator recommended by the Governor's Task Force on Tax Policy in Nevada, has been embraced by the gaming industry as a way of getting other businesses to pay their fair share of taxes. The Las Vegas Chamber of Commerce and several industry groups oppose the proposal, however, and so does Schwer.

Schwer said the gross receipts tax has the potential to hurt low-income taxpayers because they usually spend a greater percentage of their income with businesses such as supermarkets that operate on low margin. With businesses expected to pass on to consumers at least a portion of the gross receipts tax, and with low-margin businesses arguing that they would be hurt most by the tax, Schwer said low-income residents stand to be affected most among consumers.

"What we need to understand is of all the taxes on the table, who is going to bear the burden?" Schwer said.