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Sunday, Jan. 25, 2009 | 2 a.m.
BY THE NUMBERS: COLLECTIONS
How hard did Nevada get hit by the drop in tax revenue from gaming? It’s hard to tell exactly because just the first three quarters of 2008’s total collections have been reported. Using figures for those quarters, here’s how collections from 2007 and 2008 compare.
$782,895,430 — In 2007, revenue increases slow: From 2004 to 2006, collections from gaming in each year increased by 8 percent to 9 percent. Collections increased by 2 percent in 2007.
$718,447,028 — And then the drop: Collections were down by 8.23 percent for the first three quarters of 2008.
* Includes collections for all fees and taxes, including entertainment.
Sun Archives
- UNLV economist foresees darker times (1-23-2009)
- Businesses brace for legislative session (1-23-2009)
- Legislators must look outside gaming industry for budget solutions (1-22-2009)
- Annual report shows dramatic fall of casino profits (1-16-2009)
- Group proposes new taxes to fix state budget (1-12-2009)
When Nevada legalized gaming in 1931, it was almost an afterthought.
The modest levies on card games and slots would be the garnish. The main course through tough economic times, state leaders believed, would be looser divorce laws adopted during the same legislative session to lure unhappy spouses to spend time — and money — in Nevada.
The gaming bill’s author, freshman legislator Phil Tobin, couldn’t know that 78 years later the quality of Nevada’s schools, public safety and services to the poor would depend on how much tourists drop in the slot machines and bet at the tables.
Over the decades, as the gaming industry grew and along with it gaming tax revenue, attempts to tax other businesses or the people themselves usually went nowhere.
Some warned against becoming overly reliant on a single industry to fund government. But almost by default, gaming became Nevada’s meal ticket, though not necessarily a generous one.
Gaming directly provides a third of state revenue. Add in sales tax paid by tourists and other levies related to casinos, and the industry accounts for half of all state money, according to some estimates.
Once thought to be at least resistant to economic recessions, gaming has staggered in this one. The warnings of an overreliance on gaming now seem prescient.
Revenue has fallen. Thousands of casino employees have been laid off. Massive projects that promised to bring greater prosperity to the state have been mothballed.
Statewide gambling revenue declined by 8.23 percent for the first three quarters of 2008 compared with a year earlier.
As the Legislature prepares to convene on Feb. 2, Democrats, who control the Assembly and Senate, and many Republicans are hinting tax increases might be needed to avoid the most drastic cuts proposed in Gov. Jim Gibbons’ budget.
For the first time in perhaps 50 years, however, almost no one is talking about raising the gaming tax. Even the industry’s biggest critics — among them groups that have always said the industry doesn’t pay all it should — have backed off suggestions that the state should look at increasing the gaming tax.
State leaders will likely have to find their way without the gaming industry.
•••
The gaming industry’s unlikely founding father never owned a casino, didn’t gamble and died having never seen the Las Vegas Strip.
Tobin, a quiet cowboy who had run for the Assembly to solve irrigation problems for ranchers in Humboldt County, couldn’t have foreseen that legalized gaming would become Nevada’s economic engine and largest source of tax revenue.
In a story published in 1964, he told Las Vegas Sun Carson City Bureau Chief Cy Ryan that he had two reasons for proposing gambling’s legalization.
“First, illegal gambling was prevalent. Everyone had a blanket and a deck of cards or dice and it was getting out of hand. Some of those tinhorn cops were collecting 50 bucks a month for allowing it.
“Secondly, the state needed revenue. This way we could pick up the money from the license fee for the games.”
Those fees were modest: card games were taxed at $25 per table, per month ($337 in today’s dollars) and slot machines were charged $10 per month for “each handle.”
The state, counties and cities shared the revenue.
In 1945, the Legislature changed the way it taxed casinos, forever linking Nevada’s financial stability with the prosperity of its gaming industry. The state began taxing gross gaming revenue — the casinos’ gaming revenue, minus gamblers’ winnings.
“There was never some type of bargain struck” that legalized gaming would fund state government, said David G. Schwartz, director of the Center for Gaming Research at UNLV. “As gaming developed, it assumed the tax burden. No other industry did. But gaming could keep its taxes low compared to other states with gaming.”
In the debate that preceded the passage of the gross gaming tax in 1945, some argued the levy should be as high as 10 percent. Lawmakers eventually set it at 1 percent. (Two years later it was increased to 2 percent.)
Still, the industry protested. “The gamblers themselves ... claimed the new tax law would put them out of business and serve as a bar to the construction of new and elaborate hotels which they said were planned in the state,” the Reno Evening Gazette reported after the 1945 session.
Similar arguments would be repeated over the next 50 years, each time lawmakers entertained a proposal to raise the gaming tax. Despite the repeated forecasts that a higher gaming tax would be the death of the industry, gambling and the state boomed.
•••
The gaming tax embodied and perpetuated a quintessential Nevada philosophy — fund government by taxing the other guy.
The gambling levy wasn’t the only manifestation of Nevada’s anti-tax ethos.
Around the time gambling became legal, the state launched a campaign to lure wealthy individuals from across the country, promising them a safe harbor from taxes if they became residents. “The One Sound State” campaign, detailed in a 1937 Time magazine article, promised the well-heeled: “A balanced budget. No corporation tax. No income tax. No inheritance tax. No tax on gifts. No tax on intangibles. The greatest per capita wealth ($5,985).”
The magazine noted the state’s uniquely western philosophy, describing it as a place “where easy divorce, open prostitution, licensed gambling and legalized cockfighting are only the more luridly publicized manifestations of a free & easy, individualist spirit deriving straight from the mining camp and cattle ranch.”
During the session the Legislature legalized gaming, it also reduced the waiting period for a divorce to six weeks from three months. It was an attempt to increase Nevada’s share of the nation’s divorce tourism market.
The divorce trade was supposed to save us, said Bill Thompson, a UNLV professor who has studied gaming. Legalized gaming was “almost an afterthought,” he said.
The Legislature also debated instituting a lottery and eliminating all other taxes. (A lottery has remained a popular proposal to address the state’s funding problems. Bills to put a lottery before voters have been introduced in almost every legislative session since 1975.)
•••
In 1955, the state was at a crossroads, according to Collier’s Magazine, which published a scathing cover story on “The Sorry State of Nevada.” It had nation-leading suicide and crime rates, lacked a mental health clinic and was the only state that didn’t accept federal money for poor children in widowed or broken families.
“Too rich to accept normal taxes, too poor to maintain its institutions and agencies on a decent twentieth-century level, coddling known racketeers and making them respectable by legalizing their operations, while turning a cold, poormaster’s eye to its poor, its sick, its socially misshapen.”
Later that year, Charlie Russell, a Republican, won the governor’s seat on a no-new-taxes platform. However, in his State of the State address, Russell called for new sources of revenue.
Post-World War II Baby Boomers were entering schools and parents were horrified at what they found. Schools were underfunded and crowded; teachers were underpaid.
“For too long, Nevada has not met the responsibility of a planned program for the schools,” Russell said. “Every two years the problem has been met only with stopgap measures.”
Two years earlier, the Legislature had attempted to address the problem by increasing the kindergarten age, thus keeping enrollment down. But parents continued to protest. Hundreds showed up at PTA meetings, and they organized.
The “little mothers,” as they came to be known, lobbied legislators and generally raised a ruckus.
“You couldn’t turn a corner without one of the ‘little mothers’ buttonholing lawmakers in the hallways of the Statehouse,” Mary Ellen Glass, a little mother, wrote in the book “Nevada’s Turbulent 50s.”
Although some historians think Glass overstated the effect of the “little mothers,” it’s clear there was public pressure to better fund schools. Las Vegas’ superintendent of schools told newspapers that unless funding was increased, there would be a ballot initiative to raise taxes.
“Inevitably (gaming companies) would declare that they were carrying more than their fair share of the tax burden already, and thus the citizenry should prepare to pick up their own part,” Glass wrote.
In the face of gaming industry opposition, Russell signed a bill that more than doubled the state’s gaming tax to 5 1/2 percent. That session, Russell also signed into law the state’s first sales tax, which was 2 percent.
There was an uproar, particularly over the sales tax. Opponents put a referendum to strike it down on the ballot the following year. It failed by a 2-1 margin.
•••
The bill signed by Russell would be the last large increase in the gaming tax.
Despite polls showing voters overwhelmingly in favor of raising it, the political will was rarely there. When it was raised, the increase was incremental.
In 1959, a state study recommended the gaming tax be raised to 7 percent and that taxes on alcohol and cigarettes be increased. Nevada shouldn’t rely on a sales tax because it placed an undue burden on the poor, the report concluded.
But the prospering gaming industry had gained the necessary influence with state political leaders, who balked at raising the tax.
“We could kill the golden goose,” Assemblyman Thomas Kean, R-Washoe, said of the proposed gaming tax increase.
The gaming tax proposal died, while the levies on alcohol and cigarettes passed.
The gaming tax would remain unchanged until 1981, when the Legislature increased it by a quarter point, along with enacting a prohibition on local governments raising any license fee or tax on gambling.
That year the state enacted what would become known as the “tax shift,” moving sales tax money from local governments to the state and giving them property tax revenue in return.
With sales tax disproportionately paid by tourists, the state, in effect, became even more dependent on gaming.
The industry’s growing power was evident to state Sen. Don Mello, who took up a populist call to raise the gaming tax during the 1985 Legislature. “When you’re talking about raising the gaming tax, people tend to walk on the other side of the hall when they see you,” Mello said in an interview last year.
After failing to get the increase through the Legislature, Mello drafted a ballot initiative to increase the gaming tax by 2 percentage points. With the threat of the petition, the gaming industry agreed to an increase of a half point, a quarter point each in 1987 and 1989.
“It was probably 100 percent a bluff,” Mello said of his petition. “The teachers wouldn’t help me; the senior citizens wouldn’t help. No one. When you look at the fact that no one is coming to you, even if you’ve earmarked money for them, then that’s pretty bad.”
Bill Bible, of the Nevada Resort Association, attributes the gaming tax rate’s stubborn inching upward to an overall aversion to taxes in the state.
The state did continue to increase the sales tax as politicians repeatedly noted that it was paid disproportionately by tourists.
In the 1980s, amid a growing anti-tax movement nationally, groups in Nevada began pushing for a constitutional ban on personal and corporate income taxes.
The gaming industry feared that, with those options ruled out, the Legislature would go after gaming whenever the state needed new revenue. Making a political calculation, the industry funded a constitutional amendment of its own to ban a personal income tax, but not a corporate income tax.
The gaming-sponsored ballot measure won.
Despite gaming’s political muscle, it has failed to spread the tax burden to other businesses in Nevada, where native sons and daughters are still raised on the anti-tax philosophy of the past.
In 2003, following yet another exhaustive study of the tax system, this one commissioned by then-Gov. Kenny Guinn, an effort was made to introduce a gross receipts tax on businesses. As part of that proposal, gaming companies agreed to an increase in the gaming tax rate.
The business tax fell apart and the compromise — a patchwork of tax hikes that, combined, was the largest tax increase in state history — included a half point increase in the gaming tax.
Gaming industry leaders still grumble that they were again left holding the bag, while the state’s chambers of commerce walked away virtually unscathed.
•••
In the 1940s and ’50s, newspapers often editorialized that a reliance on gaming would give the industry too much influence over public policy. “The people who pay the piper will call the tunes,” one stated.
In later decades, concerns shifted to the potential economic perils of relying on a single industry to largely fund the state.
A study commissioned by the Legislature and completed in 1989 warned that Nevada would need to diversify its tax base to maintain services. A 1996 study concluded the state’s growth “will increasingly pressure Nevadans to look for government revenue sources other than gaming if current levels of government services are to be maintained.”
It’s an issue that has been debated each time the state faced recessions and budget shortfalls — in 1983, 1991 and 2003. And it will be debated again this year.
But the belief during tough times that gaming would come back always prevailed, said Guy Rocha, the state’s archivist. Las Vegas would build itself bigger and grander. And gaming taxes would continue to get us by.
“We had this unbounded optimism,” Rocha said. And it was always borne out.
This time might be different, Rocha said. “I’m of the opinion that it will come back. I don’t know if it will come back so big,” he said.
Not having gaming to shoulder most of the burden, Rocha said, will test Nevada’s “don’t tax me, tax the guy behind the tree” ethos.
“The growth of Las Vegas is not going to be the same anymore. I’m not saying it’s going to go away. I’m not saying people aren’t going to profit. But the revenue hand over fist, the geometrical expansion of gaming, I don’t think it will come back.”
And that may force political leaders to ask residents to, at last, pay for their own schools, roads and health care.
"Once thought to be at least resistant to economic recessions, gaming has staggered in this one. The warnings of an overreliance on gaming now seem prescient."
The writer of the story is saying that if we raise taxes on non-gaming entities then during times of economic recessions the tax revenue will keep rolling in.
The writer of the story fails to present any evidence to support that theory.
This is not a well-balanced story.
There is no quotes or citations of studies that show states that have diversified economies and/or broad base taxes (corporate and personal income taxes) do no better in government revenue totals during a recession than Nevada does.
Here the Sun is being a cheerleader for the Democratic Party's goal raising taxes.
nance;
There you go again. You are complaining that the story is a Democratic Party cheerleader. However, you have zero input in return except to lavash praise on Gibbons budget. Again, take a look at other states. Nevada has the lowest tax in the USA. You wan't every service but do not want to pay for it. NIMBY for every issue that is talked about. If the Sun is being a cheerleader for the demos, then you are a slapped down gop cheerleader who can't clean your own face.
Try putting something on the table that will actually work. Also, since you are not a democrat, why are you always the first one to post on these articles? Reading the rag Sun under cover of darkness. Trolling again.
David
Thanks for the article on Nevada's tax history in the 30' and 40's. I have looked for this type on information but have not had much luck. It is truly amazing how this cowboy state with a NIMBY tax structure actually raises ANY money for government and services. Today, as has been the case for the last 20 years, Clark County is the engine, what is left, of the state.
Now Gibbons wants to cut not only UNLV to the breaking point, but suck out almost $100,000,000 extra for the state that is intended to stay here in Clark Co. for services. He is from another planet. No need to go to Area 51 to look for green people.
Nevada thinks it can be a low tax state while supporting unions. We build schools that cost 30% more than in right to work states. Why? Will the non-union schools fall down? That's the BS that the Union craftymen want you to believe. OK, let's continue to support the Davis-Bacon wages, and watch our state turn into Taxachusetts West.
Go ahead and add a lotto, and PowerBall or Mega Millions, and scratch off tickets. For just one comparison, the Ohio Lottery historically profits $650-750 million per year. About half Nevada's current need. I know it's hard to compare Nevada to anywhere else, but a lottery would bring the state some more money.
Plus, on some of the scratch offs work deals with the casinos for co-branding and some minor profit sharing. Drawing lotto numbers could be made into a small show at a casino.
Create a Nevada Lottery with full Vegas style!
If we were to believe the hype that is getting spun on a daily basis by the interest groups here in Nevada one would think that Nevada's budget shortfall was a one state issue.
All we need to do is look at next door neighbor California to see that this isn't the case.
Regardless of what type of tax structure we have the economy will dictate how much revenue we have to budget with and there will always be peaks and valleys in the revenue generated...
this seems to be a fact that is overlooked by the proponents of raising taxes in tough economic times like the entire country is facing today.
Also missing from the higher taxes group is their plan on how this "shortfall" should be met.
The sun looks less and less like journalism each time I read it - and I even think the NY Times is a fairly balanced paper.
First, gaming taxes make up about almost 1 half of the general fund which is in turn of 1/3rd of the total budget.
Second, corporate income taxes are considered the most volatile tax.
Third, Nevada was the ONLY state in the country that had no personal or corporate income tax that also had a budget shortfall in FY 2008.
Fourth, Arizona has a more diverse budget, including sales tax, higher property taxes, personal and corporate income taxes, and their budget shortfall is even larger.
The problem is wasteful spending, having no priorities, setting no money aside for the future, and not controlling the growth in spending. Period.
Nice - but rather useless - synthesis.
NevaDUH was founded on its Comstock (and other) mineral wealth. After Las Vegas becomes a ghost town, it's still all that will remain although it's being "stripped" away rapidly. We are currently the #3 precious metals producer in the WORLD. For this the State gets about $25 million out of $6+ billion in revenue.
At the bottom of this travesty you will find ALL our politicos, and especially Boss Reid, selling OUR resources in exchange for PAC contributions to their favorite charity - themselves.
Wake up, NevaDUH, or you're going to see your state in the bankruptcy section of the legal notices.
No one - let me repeat - no one is arguing that the state would be impervious to problems during an economic downturn once our tax burden was shared.
The argument is that the downturn would be degrees less if the burden was shared between gaming companies, whose revenues are down 60-something percent, and mining, whose revenues are NOT down 60-something percent.
Why is that so hard to understand? If you have three sources of revenue, one of which is HIGHLY volatile, and your revenue tanks, you should look at ways to make your portfolio LESS VOLATILE. Duh!
This is investing 101, people.
"The argument is that the downturn would be degrees less if the burden was shared between gaming companies"
This is not supported by evidence.
States, like California, have diversified economies and broad base taxes and they are in worst shape than Nevada in revenue loss.
I would argue that gaming is directly link to the national diversified economy. If the national diversified economy is up than gaming is up. If the national diversified economy is down than gaming is down.
There is not a major industry that people can point to that Nevada can realisticly be brought to the state and generate enough tax revenue to offset the loss of economic revenue during a downturn.
If there is one proposed then I would like to hear it.
Lastly, I hear competing ideas. Some argue for broad base taxes and some argue for a diversified economy. If one increase broad base taxes on businesses that would discourage new businesses moving to Nevada and work against diversifing the economy.
Why not drop these bogus agruments and just say what you really want which is that you just want to raise taxes.
LOL, look everyone, it's another jfnance32 "quote."
I know some people with ADD can't finish reading a sentence, but this is ridiculous. Try quoting and understanding that entire sentence, jfnance32. It's not that hard! You can do it!
The California analogy fails, as they do not rely so heavily on a single source of revenue for their budget. Again, this is investing 101. If you have many small investments, the risk is smaller. If you have fewer, larger investments, the risk is greater. Duh!
I'm presenting a hypothetical example here. I'm only stating that so that when jfnance32 tries to misquote and take my words out of context, as he did above, it's noted for easy reference.
Let's say our budget is 1000.
Currently, casinos provide around a third or so of our tax revenue... $333 of that $1000. If casino revenue drops 60%, one could assume a similar drop in tax revenue. So instead of getting $333 from casinos, we're now getting $133 less.
Let's add something into the mix, shall we? Say, mining. Let's strip away all those mining deductions that allow them to remove hundreds of millions of dollars from Nevada without paying taxes.
Let's reallocate the budget, too. Now that we have another revenue stream, gaming's share of our tax burden is lessened, because mining brings in a greater share. Now gaming is 25% of our total budget. $250 is now the tax revenue that we rely on gaming. When it drops by 60%, we get $100 less.
Can you do simple math? Are you able to understand that losing $133 is MORE than losing $100. Is losing $100 better than losing $133? Of course. That's how it's more stable.
David,
Enjoyed your account of the history of gaming tax and other taxation issues in the state. My only comment is where the focus is being placed. In addition to looking at how to tax, we should look equally as much as how to spend. Upon closer examination, we'll find gross waste in certain areas of spending. I'm not a "smaller government", but of smarter government.
California state budgets has been struggling for years when it comes to economic recessions.
Also, your theory only works if there are other non-gaming industry that does not get effected by a national economic recession.
You should use your California example. You should provide a listing of industry in California that is generating so much revenue that their state budget is doing just fine and dandy in this recession.
Obviously, your theory is not working in California.
"California state budgets has been struggling for years when it comes to economic recessions."
Geez, that must suck for California. Last time I checked, though, this was Nevada, not California.
"Also, your theory only works if there are other non-gaming industry that does not get effected by a national economic recession."
Again, you are wrong here because you don't understand my point. Different industries are affected to DIFFERENT DEGREES by the recession. Recessionary pressures mean people spend much less on discretionary things (like VACATIONS and GAMBLING). There are many things that are not discretionary, and thus those industries and markets are not hurt TO THE SAME DEGREE.
http://is.gd/hbTP
You just don't get it, really. I guess you think that in a recession, all industries are affected the same way, to the same degree. That's a really naieve way of thinking, I'd say.
You have a theory that does not work in California or North Carolina or New York or South Carolina.
Can you name a state where your theory works?
I think only states that do not have diversified economies, like Alaska, are sometimes not effected by national recessions.
Their budgets are affected by downturns in energy markets which sometimes are not in synch with the national economy.
Also, what is your game plan to make Nevada's economy to be diversified? I am curious on how you are going recommend on how that the state will achieve that.
I get it, you don't understand basic economic theory. You think that, in a recession, all sectors of the economy are hit equally.
That is very naieve, and even quite foolish. So long as Nevada relies so heavily on a single, discretionary industry, we will be more prone to dramatic fluctuations in our revenue.
If CA, NC, NY or SC relied as heavily on tourism to fund their budget as Nevada does, they would be even deeper in the hole.
It's a question of degrees, jfnance32. I know you aren't very good with nuance, so I don't expect you to understand that when the economy is down, discretionary spending decreases the most, and gaming/tourism is the definition of discretionary.
No, in your world, all industries fall to the same degree. Tell me, what color is the sky in your world? LOL!
As for what we could do to soften the blow of a bad economy? Remove tax exemptions for mining. There are several mining companies here who pay a tax rate of less than 1%. Nevadans are giving away our natural resources so that some big mining companies can enrich their owners and investors. Removing the outrageous deductions for mining would significantly boost our state tax revenue, and would make us less reliant on gaming.
"If CA, NC, NY or SC relied as heavily on tourism to fund their budget as Nevada does, they would be even deeper in the hole."
Uhmmmmm...CA, NY and SC are actually in deeper holes than Nevada.
CA has been borrowing money to balance its budgets. Arnold order all state workers to take off 2 days each month without pay. Last July, he order 10,000 state workers laidoff. School teachers have been laidoff in CA, too.
CA government credit rating is one of the worst in the country.
SC is so out of cash that it is about to stop cutting unemployment checks.
In NY they are pushing for freezing state salaries, making big cuts to higher ED and making state employees pay more for health care benefits. That sounds like Nevada.
There are many states that have larger deficits as a percent of their 2009 budgets than Nevada.
You theory still fails the reality test.
Also, what is your game plan to make Nevada's economy to be diversified? I am curious on how you are going recommend on how that the state will achieve that.
How much are you tax mining....$1.3 billion dollars??? I think that would put them out of business.
Do you see what jfnance32 is doing here? Apples to bananas.
I guess you had a hard time reading what I wrote about how those states would be suffering even more if they were as dependent on gaming as Nevada. That one kinda flew right over your head, huh? Of course all states are suffering, but Nevada has a valid road to become less dependent on gaming, and no amount of subterfuge can disguise that.
"Also, what is your game plan to make Nevada's economy to be diversified? I am curious on how you are going recommend on how that the state will achieve that."
I've already given you an example. I guess you aren't too good at reading. You must not be aware of the clause in the Nevada constitution that says mining's tax rate should be 5%.
From 2000 to 2007, Nevada mining companies had a gross production value of 25.5 billion in gold, alone. The reported taxable value, after all the deductions? 5.4 billion. The state netted 125.3 million in tax revenue from 25.5 billion in gold produced.
Had we kept the 5% net proceeds of minerals tax that is called for in the state constitution, we would have seen 1.2 billion in tax revenue.
And that is only gold, that doesn't take into account silver mining, or any of the other mineral development in the state of Nevada.
LOL, you think a 5% tax rate will put a company out of business? Ooook!
I do find it strange that the people who think the Sun is unfair, biased, etc., are right-wing. Out of curiosity, do nance and kdr ever read left-wing publications and commentators? And don't say the Sun is left-wing. I mean actual liberals like Frank Rich and Paul Krugman. Or you do read only those you agree with?
I am OK with raising taxes on mining companies.
Currently, mining pays around $30 million a year in direct mining taxes. Rogers has a plan to increase them by 5 fold to $150 million a year. I doubt if the Democrats will be so bold and increase them 5 fold.
That still leaves you $1 billion to raise in taxes to prevent the Gibbons cuts that you probably do not like.
The Sun is not as left-wing as Rich and Krugman but they are firmly the mouth piece of the Nevada Democratic Party which is also not as left-wing as Righ or Krugman.
I read the Sun to be informed on the what the Nevada Democratic Party since it is the mouth piece of the Nevada Democratic Party.
I think the Sun is not ashamed that it is the mouthpiece of the Nevada Democratic Party. They are probably proud of that.
It's not just gold.
Take Gypsum, for example.
In 2007, gross proceeds of gypsum mines in Nevada were $14,971,988.
How much did they pay in taxes?
$46.98.
Less than fifty bucks on almost 15 million dollars worth of gross proceeds. That's ridiculous.
In 2007, the gross proceeds of minerals in the state of Nevada was $5,157,136,841.
Mining companies, state-wide paid an effective tax rate of 1.5%.
Had they paid the constitutionally-mandated rate of 5%, Nevada would have seen 3.5x more tax revenue from mining.
The difference over the biennium would have plugged the hole that Gibbons plunged into higher education.
I doubt your numbers.
When Rogers was talking about increasing the mining tax from $30 million to $150 million a year he was talking about the whole mining industry and not just gold. Believe it or not. I trust Rogers numbers. I doubt if the Democrats will 5x the mining tax.
Even with 5 times increase of the mining tax, you are still left with $1 billion in Gibbons cuts that you probably do not like.
Add a mining tax to add +150 million.
Add a sales tax on food to add +250 million.
Add a tax on advertising to hit Rogers where it counts to add +50 million
Increase cigarette taxes for +50 million
Increase booze taxes for +75 million
Increase the price of a drivers' license ($19 for 4 years is insane) +50 million
Release all non-essential government employees - +250 million
Sales tax up 1/2 percent adds +200 million
Freeze all state salaries for 2 years
See how it shakes out and make adjustments up or down in 2012
Add provisions to bills that allow for automatic tax decreases if gaming revenues increase.
In 2007:
Pabco Gypsum mine produced $7,342,617.
Actual tax paid: $0
Empire Quarry produced $4,000,828.
Actual tax paid: $0
Adams Mine produced: $3,626,393.
Actual tax paid: $0
Bunkowski Mine produced: $2,160.
Actual tax paid: $46.98.
It's right there, on page 13 of the DoT Net Proceeds of Minerals report.
You can doubt my numbers all you wish, but they aren't my numbers, they are the numbers produced by the Department of Taxation.
And no one is calling for a mining tax increase. They are calling for an end to the ridiculous deductions that allow mining companies to deduct up to 86% of the gross value of production. No one is calling for the tax rate to increase, but no company should be allowed to deduct such a massive percentage.
Heck....perhaps you should send Lord Rogers a note and say you found a ton of more money to tax.
If you are right, then you will be tremendously disappointed if Buckley and her pals do not raise a $1 billion or so in taxes on mining.
Lord Rogers is asking it be raised to $150 million year.
Just my guess, he knows more about it than you.
That still leaves $1 billion in new taxes...if we use Rogers numbers.
Gee, Nance, I tend to think of it as the Sun actually reporting what the Nevada Democratic Party is doing or not doing, as opposed to the right-wing bilge in which the Sun is wrapped. If you keep talking that way, we will think you are Sherm or Mitch, although you strike me as bright to be either of them.
Yet again, for those who have failed reading comprehension:
The mining tax rate cannot be increased without an amendment to the Nevada constitution. Duh!
What is being targeted is the deductions that allow mining companies to claim exorbinant deductions. Check out the report yourself:
http://tax.state.nv.us/DOAS_Publications...
If the deductions were removed entirely, mining companies would pay a MAXIMUM of 5%. That's mandated in the state Constitution.
There's simply no justification for mining companies to gross 5.1 billion, but only claim a net of 1.5 billion. The mining industry and it's lobbyists have protected it long enough. It's time mining pay it's fair share.
And, of course, I welcome ANY numbers which disprove this. Funny how even those who "doubt" my numbers haven't given a single rebutting statistic...
You are fighting Rogers and not me on this.
I am using Rogers numbers.
If you want to be cute about the syntax then I have no problem with that.
Rogers wants to increase the mining tax revenue by $150 million. And yes he wants to do that via reducing deducations.
So that still leaves you $1 billion in Gibbons cuts that you probably do not like using
Rogers numbers.
I am quoting Rogers stats.
Perhaps you give Lord Rogers a call and tell him you have found a ton of more money. I know he would be happy about that.
Go ahead and give Rogers a call or an email.
Do not cry if the Buckley does not use your numbers.
I'm not fighting Jim Rogers, I'm agreeing with him. I think we should remove more deductions than Rogers is calling for.
Again, these aren't "my" numbers, they are the numbers of the Department of Taxation. I guess you don't understand something simple like that.
I'm glad Jim Rogers is standing up to Jim Gibbons and showing real leadership. Likewise, I appreciate Barbara Buckley's hard work to take up the slack of Jim Gibbons.
That report should be mandatory reading for every working adult in Nevada. The mining companies want positive P.R., so they "prepay" their taxes for the year? A whopping 30 million? Yet they'll gross near 5 billion?
Well, don't they deserve a pat on the back.
ksand99.....PLAN (Progressive Leadership Alliance of Nevada) is arguing with your numbers too.
They say: "Eliminating the gratuitous list of deductions from the formula for establishing net value, and levying the constitutionally mandated 5 percent tax rate on a more sensible net proceeds of minerals would generate an estimated additional $141 million per year."
Only $141 million per year.....that still leaves you $1 billion short when dealing with Gibbons cuts that you probably do not like.
LOL, reading comprehension, jfnance32.
Let me point out a really obvious difference between what I see and what PLAN sees. Try to pay attention to the capitalized words.
"In 2007, the GROSS proceeds of minerals in the state of Nevada was $5,157,136,841."
"There's simply no justification for mining companies to GROSS 5.1 billion, but only claim a NET of 1.5 billion."
"Eliminating the gratuitous list of deductions from the formula for establishing NET value, and levying the constitutionally mandated 5 percent tax rate on a more sensible NET proceeds of minerals would generate an estimated additional $141 million per year."
It is clear you can't tell the difference between gross and net. LOLOLOL!!!!
ksand99.....PLAN has said that if one eliminates the deductions that it will result in an estimated of additional $141 million to the state.
Do you understand that?
Is that tooooo hard for you to understand?
Perhaps, you should get on your high horse and ride over to PLAN's and tell them that they are stupid and do not understand that eliminating the deductions will yield more than $141 in additional revenue.
Of course, you are much smarter than all that staff at PLAN's HQ.
Wow, you really don't get it.
Should I put it as simple as possible?
PLAN's estimate is based on net revenue.
My estimates are based on gross revenue.
Perhaps you don't know what "capitalized" means?
"Perhaps, you should get on your high horse and ride over to PLAN's and tell them that they are stupid and do not understand that eliminating the deductions will yield more than $141 in additional revenue."
And, of COURSE it will yield more than $141 in revenue. LOL!
Ok....you are much smarter than PLAN.
They are so dumb. You are right. They came up with this big grand plan to raise taxes by over a billion dollars and ooopppps their mining tax section to eliminate deductions has a big mistake in it.
They must have egg on their face. They could have greatly increase their tax plan if they only had you on their staff.
Perhaps you should give them a call and explain to them your grand plan to get more than $141 in additional revenue from mining by eliminating deductions.
Here is their number: 702-791-1965
or you can leave them a message here: http://planevada.org/index.php?option=co...
They can still come out with a revised plan and give you the credit.
You can be the savior of the state.
More than $141 million that is.
Well, since you seem to want to ignore basic English, yes, my estimate is for gross revenue. PLAN's estimate is for net revenue.
Since you still can't grasp that simple difference, I will continue repeating myself until you do.
But do continue the sophomoric sarcasm. That's always hilarious.
Be sure tell PLAN about your gross vs net calculations so that they can update their tax recommendations to the state.
You are soooooooooo smart.
Genius level material.......
You will be a big addition over at PLAN.
It is so sad that they did not have your brain power when they calcualted that the eliminating the deducations would only yield an additional $141 million in new revenue to the state.
Dam it....it they only thought of your "gross" calculation.
How...boneheaded of them......
I give Buckley a call. You just solved her budget problem.
ksand, this is Nance's way of waving the white flag.
When all he's got left is bitter sarcasm, you've won the argument.
theBS is agreeing with ksand that PLAN calculation that eliminating deductions for the mining industry will only generate an estimated $141 million in additional revenue is wrong.
That is so funny.
Actually, looking at PLAN's report, they don't call for repealing all deductions, thus Big Mining's net proceeds would be less than their gross. It's on page 15.
Ksand's arguing for no deductions. Given Big Mining's shafting of Nevada, I'd sign on to a 5-year deduction-free period in which Big Mining paid the full 5% NPOM.
PLAN apparently wants to play softball with mining. Why?
Yeah, Nance, look at page 15. PLAN clearly allows some deductions.
They have gross production listed at 4.8 billion, and reported taxable value at 3.6 billion. Obviously, PLAN still allows limited deductions.
It's a far cry from gross production of 4.8 billion and reported taxable at 1.2 billion, but it could go farther.
Try not to stumble over the numbers, genius.
Simple math, Nance.
2007 gross: 5.1 billion.
5% OF 5.1 billion = 255 million
2007 taxes paid: $60 million
255-60 = 195 million difference per year.
In the biennium, that's almost 400 million dollars, virtually enough to rectify Gibbon's cut to higher ed.
Nance, you're sunk!
Exactly right, based on PLAN's outline, they leave some deductions in place. That accounts for the difference.
Thank god someone else can do simple math.
And with that, a single solution, higher ed can be spared such a devastating cut. That is a single solution. There are many more.
There are many more solutions that Jim Gibbons ignored in writing his budget. Instead, he's going to beg for a bailout. Guess he won't be able to run as a conservative!!!
Thanks for making me laugh.
But heck......it seems you boys have game plan.
You should present it to Buckley as you guys being experts on mining taxes and all.
Of course, your plan would not be in violation of Nevada's Constitution.
You can solve the state's budget problem.
You will be heros.
You guys should write a letter to the Sun promoting your plan.
Be sure to CC Lord Rogers, Gibbons, Buckley, Horsford and PLAN.
They all will get a kick out of it.
Huh, was there an argument there, or just punting?
Seems that Nance has lost his steam...
Too bad, I was just getting started.
So when are you guys going to promote your tax mining solution?
It is brillant!!!!!!
I wonder why PLAN did not come with it.
I wonder why??????????
Any ideas?????
Nance: (punt)
Do you have an argument, or just going to continue the punting?
I believe that you and your buddy's plan is not within the parameters of the Nevada's Constitution.
But heck.....that should not stop you from trying.
Go start writing your letters.
The Nevada Constitution calls for a 5% NPOM. The deductions aren't written into the constitution, they are written into NRS (Specifically, NRS 362.120) which are subject to change by a vote of the legislature.
Eliminating them could be accomplished in a single bill.
But do point out where such a change is against the constitution. I'd LOVE to hear this one.
You need change this in the Nevada Constitution:
"The legislature shall provide by law for a tax upon the net proceeds of all minerals, including oil, gas and other hydrocarbons, extracted in this state, at a rate not to exceed 5 percent of the net proceeds. No other tax may be imposed upon a mineral or its proceeds until the identity of the proceeds as such is lost."
You will need to modified the words "net" to become "gross".
I am confident that if you remove any of expenses directly related to extraction and transportion of mineral in calculating the tax then mining industry will challenge that NRS in court as being unconstitutional. Even In the PLAN's plan, they explain that those direct expenses are normal and apporiate in calculating the taxes according the Nevada Constitution.
PLAN's plan is remove the indirect cost associated with extracting and transporting the mineral.
If one removes all deductions, the gross becomes the net. (Net refers to income AFTER deductions are made) With no deductions, the gross amount will be equal to the net amount. Thus, a simple change of NRS nets nearly 400 million in the biennium.
Unconstitutional? Nope.
You and your buddy have a good plan.
You and your buddy should present your plan to Buckley, Hordsford, PLAN and the Sun.
That whole thing about the words "gross" and "net" and their basic fundmental legal meaning is no big deal. Who really cares what is in the Nevada Constitution anyway? Net vs Gross......everybody will just look the other way.
(All this is funny coming from somebody that whines about Gibbons violating a NRS. Lets violate the state constitution instead.)
Go for it!!!!!!!!
Mr. Green, the sun is certainly a left-of-center paper. There is little doubt about that.
Most newspapers do a pretty good job of hiding personal bias within the articles themselves (I'm not counting opinion sections). I personally think the bias comes out because the editors/owners at the Sun push that view point (or at least allow their writers to write unobstructed). The Sun is following the business plan of Fox News. The Greenspuns are basically a liberal Rupert Murdoch.
Heck, I even know a guy who writes for the New York Times who says the Las Vegas sun is incredibly politicized in its articles...he says the same thing about the RJ too...to a lesser extent.