Columnist Jon Ralston: Payroll tax was pet project

Wednesday, Nov. 2, 2005 | 7:11 a.m.

On June 4, 2003, the Las Vegas Chamber of Commerce, which already had alighted on as many tax positions as it has members, wrote to a besieged Gang of 63 pondering the largest increase in history.

"The chamber has consistently supported the passage of a broad-based tax on business to stabilize and provide a consistent and long-term revenue stream for the needs of our state," the missive began. "We remain committed to this principle. In our view, only three viable options exist to attain this goal."

Those options? A business services tax. A net income tax. And, the chamber favorite, which the organization advocated for weeks in the capital and eventually saw enacted: a payroll tax.

So imagine my surprise, in my quixotic quest for intellectual honesty, when I came across a note sent this week by chamber Chief Executive Kara Kelley to the thousands of small businesses that now, mostly thanks to the chamber, have to pay that payroll tax:

"News Flash: When you write a check for your company's payroll tax on Oct. 31, you may notice a little extra money left over on your bottom line. Yes, that's correct. Thanks to the Las Vegas Chamber of Commerce, you and your business are getting a tax break."

So the Las Vegas Chamber of Commerce, directly responsible for imposing a payroll tax on its members two years ago, now is taking credit for a minuscule reduction (0.65 percent to 0.63 percent) in that tax enacted last session.

This is the kind of rhetorical pirouette that not even the most skilled politicians could pull off, a stunning example of a group that has such contempt for its members that the belief is that the benighted businesspeople actually will buy this patronizing message. This tax was the chamber's baby, one it nurtured and cared for until it could be adopted by lawmakers as the businessfolks dismissed a gross receipts tax that would have exempted most small businesses.

(Yes, an argument could be made that gross receipts tax exemptions might be eliminated later. But why didn't the chamber work to kill any taxes on businesses or stand up for raising money for needed programs, rather than spending the session spinning its way between those stances?)

In her missive, Kelley explains the history:

"The Nevada State Legislature selected the (payroll tax) as a revenue stream during the 2003 legislative session when the economy was down and the state needed more money to meet its budget. At that time, the chamber pushed for and got passed a health insurance deduction to the (payroll tax) to provide relief to those businesses that pay for a qualified health insurance/health benefits plan for employees."

This is a little like a history lesson of World War II that goes: The United States fought in a war. The United States then proposed the Marshall Plan to help rebuild Europe after the war.

Now what was excised from this historical retelling? Oh, yes, the bombing and strafing that caused the damage, just as Kelley carefully omitted the war the chamber fought to get a payroll tax imposed that inflicted financial carnage on the chamber's membership.

Sure, the businesspeople fought to have the health care relief, but only after they pushed lawmakers to pass a payroll tax as part of the largest tax increase in history.

Then, two years later after a huge surplus materialized, did the chamber push to repeal the payroll tax it helped impose on its members? No, it supported a slight reduction pushed by Sen. Bob Beers, R-Las Vegas, who did not need the chamber's help to persuade lawmakers eager to pass some kind of tax cut, no matter how meaningless and tiny. And that reduction, it should be noted, expires in June 2007, while the payroll tax lives on in perpetuity.

So here's the real news flash for chamberites: Your leaders are responsible for the payroll tax you now pay. It would not exist without their lobbying.

And, yes, your leaders also supported slightly reducing that burden they saddled you with, resulting in that "little extra money" Kelley promised you.

Aren't you proud to be a chamber member?