Guinn fine-tunes his tax increase proposal

Erin Neff

Monday, March 3, 2003 | 11:27 a.m.

CARSON CITY -- Gov. Kenny Guinn has tweaked the linchpin of his $1 billion tax proposal, and will submit a bill to the Legislature this week with changes to a credit for businesses paying the gross receipts tax.

The rate of the tax -- one quarter of one percent -- on all business receipts over $450,000 will stay the same. But the governor's bill, expected late today or tomorrow, will reduce the credit to the business activity tax.

In his initial budget briefing and State of the State address, Guinn said any company that pays the gross receipts would be eligible for a credit on the per-employee tax. That tax is currently $25 per employee per quarter, or $100 a year per employee.

However, 62 percent of all Nevada businesses would not have to pay the gross receipts tax because they would not meet the $450,000 threshold. That meant that smaller businesses would not get the credit on the so-called head tax.

"We were setting up a bifurcated, if you will, or unequal form of taxation," Guinn said this morning. "That would have left us subject to constitutional challenge."

Guinn's initial emergency tax bill and his larger tax proposal include a tripling of the business activity tax from $100 to $300 per year per employee. That tax would be reduced to $140 per employee per year once the gross receipts begins in 2005.

When Guinn unveiled his budget in January, he said businesses paying the gross receipts would get a $100 credit on the head tax so that they would end up paying $40 per employee per year beginning in 2005.

Guinn's tax proposal will now give all businesses the same credit, with those paying the gross receipts and those not paying the gross receipts both ending up paying $80 per employee per year.

"It's a neutral change as far as the revenue goes," Guinn said this morning during a taping of Face To Face with Jon Ralston. "It does push harder on the larger businesses."

Ralston's one-hour interview with Guinn will air in two parts beginning Tuesday on Las Vegas ONE, a partnership of Cox Communications, KLAS-TV Channel 8 and the Greenspun family, the publishers of the Las Vegas Sun. Las Vegas ONE airs airs on Cox Cable Channels 1 and 39.

Guinn said his staff decided to change the credit for the head tax after analyzing potential constitutional pitfalls with his bill.

The governor said there will not be any other changes from his initial proposal to the details contained in the tax bill.