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Buckley pitches new tax plan to bridge revenue gap
Thursday, May 14, 2009 | 2 a.m.
Barbara Buckley
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Assembly Speaker Barbara Buckley is proposing to cut the payroll tax for three-quarters of Nevada’s small businesses, while at least doubling it on the rest to raise hundreds of millions of dollars in new revenue.
Buckley said under the plan businesses with payrolls of less than $250,000 would see their modified business tax rate drop from 0.63 percent to 0.5 percent. Larger businesses would see their rate rise to between 1.26 percent and 2 percent, she said.
“If we’re considering raising more revenue, not only should we exempt small businesses from those increases, we should provide them some tax relief,” she said. “These are businesses that employ a handful of people. Raising taxes on them could be the difference between laying people off.”
Seventy-six percent of Nevada businesses would qualify for the lower modified business tax, which is based on businesses’ payrolls, according to data Buckley obtained from the Taxation Department.
The state faces a massive gap between spending approved by the Legislature for two years and revenue it expects to receive from existing taxes. Republicans have held firm that the tax hike be kept to less than $800 million. Although ideas about how to bridge that gap are constantly whispered in the halls of the Legislative Building, Buckley’s is the first firm proposal offered on the record by a legislator.
Even with the rate cut, doubling the modified business tax raises a significant amount of money.
At the current rate, the modified business tax is projected to generate $536 million over two years.
Reducing the rate for businesses with less than $250,000 in payroll would lower that amount by about $16 million over two years, Buckley said. The higher tax on businesses with bigger payrolls would more than make up for the lost revenue.
Buckley is considering a run for governor in 2010. Regardless of her proposal, opponents will likely pillory her for raising taxes during a historic recession. Her choice of $250,000 as the cutoff for the lower rate echoes President Barack Obama’s campaign promise to cut taxes for families that make less than $250,000 a year.
The idea to protect smaller businesses was, at least initially, warmly received by lobbyists representing business groups. The suggestion that the modified business tax on larger companies could more than triple to 2 percent was not.
“Any help for small businesses would be a good thing,” said Steve Hill, chairman of the Greater Las Vegas Chamber of Commerce. But “anything over doubling the modified business tax would be difficult for us to support.”
Tim Crowley, president of the Nevada Mining Association, said, “Protecting small businesses is the smart thing to do in this depressed economy.
“We expect the modified business tax to be part of the mix. We’re OK with it, depending on the rate. There are limits.”
Carole Vilardo, president of the Nevada Taxpayers Association, said taxes should be equitable for all businesses.
“We have never supported an industry-specific tax or one that tried to identify a specific group to be treated differently,” she said. “That’s not a principle of fair taxation.”
The Taxpayers Association, which holds a board vote before supporting any proposal, might support a proposal if all businesses are charged the lower rate for the first $250,000 in payroll, and then larger businesses pay the higher rate on payroll above that, she said.
“That would be equitable,” she said.
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More follow the crowd and press class warfare. Why should a company pay higher tax rates because it employs more people? Are the jobs lost at a larger employer less important than those down the street?
The speaker doesn't get it. If you tax something you get less of it. If you tax employment, you will have less employees. Taking money from the private economy to pump up the public payroll results in less tax revenue in the future. Cut the expenses you cannot afford like every family and business in Nevada are doing. Pretending taxes are OK if fewer people see the impact by hiding it on the largest employers is ridiculous.
neiman1 doesn't get it: Unless you have grown ups like Buckley willing to make the hard decisions about whose ox gets gored to provide revenue to keep some semblance of functional state government, the place goes to hell in a hand basket pretty fast.
@Galfromvegas:
Buckley is hardly a "grown up." Her proposal is a band-aid fix for today's crisis. A grown up "willing to make the hard decisions" would propose a long-term solution to our ongoing budget issues.
The Nevada legislature has dealt with budget/revenue problems for years. The payroll tax is one of the more egregious taxes that exist. It is not equitable. It protects high-margin businesses with few employees and punishes low-margin businesses that must operate with many employees.
Buckley was on TV one year ago saying Nevada would never (heavy emphasis on never) be in this position again. Not under her watch.
Yet, here we are. And her proposal ensures we will be here again in future years.
Balance the budget! Its what we all do in our homes every month. No new taxes! Cut back on expenses. Cut payroll of state employees and public education. Cut all social welfare systems that are not vital. Move state services to on line status and take advantage of the internet.
Once we have a surplus you can start renewing some projects and take the payroll back to an acceptable level.
We the TAXPAYERS can not afford the luxury of fat state salary's and useless programs that just drain down the tax coffers.
Thank you Governor Buckley for standing up and showing some leadership. You will no doubt take a drubbing from the far right, the Chamber of Commerce and the RJ Editor's (I'm not sure editor is the right term). You will also likely take a hit from some of the radical posters here who have found the time to write thousands of posts (neiman1 has posted over 1200x's in less than a year - I want his/her job).
However, most taxpayers recognize there is a need for a revision of the tax structure in Nevada to maintain the quality of life we expect.
lasvegas2009;
Balancing the budget does NOT necessarily mean CUTTING. If my family budget, for example, takes a hit on incoming revenue, I MAY have to get a second job to RAISE REVENUE to balance my budget. You see, I've made commitments. Less coming in doesn't mean I don't have to make the mortgage payment, the car payment, pay my utility bills and so on. Yes, I may cut back on my utility usage, drop premium cable television, buy less groceries, etcetera. But I MUST STILL MEET CERTAIN OBLIGATIONS. GET IT?
And some of us would prefer to find ways to preserve certain essential services in Nevada and Las Vegas because
IT IS THE RIGHT THING TO DO in a functioning society. A bunch of you posters ought to band together and get yourself a few acres out in the middle of the desert somewhere and you can have your own little town with your own "special way of doing things". Think of the FUN!!!
Sheriff Neiman.
City Manager lasvegas2009
Treasurer Patrick Gibbons
City Planner future2012
Mayor KING NANCE.
Las Locos, Nevada.
Those of you who think raising taxes is showing leadership are complete idiots. Real Leadership is holding the line on spending and making the touch decisions. Tell me what you do when you don't have enough money at home, Spend more? I am convinced every person wanting to tax their way to leadership is on the Government payroll of some sort and looking out for themselves. Real Leadership is what the Governor is doing.
From Wayne: "most taxpayers recognize there is a need for a revision of the tax structure in Nevada to maintain the quality of life we expect."
LOL, good luck with waiting on the government to "maintain your quality of life." Have you considered creating something yourself to maintain your own quality of life? Or are you set on taking what others have earned?
Real Leadership is what the Governor is doing? Oh you mean like robbing Peter to pay Paul. In case you are as clueless as you statement protrays you are, I guess you forgot that Gibbon's budget included raiding the rural indigent fund and taking money from Washoe and Clark County property taxes which only forces them to raise revenue by increasing tax but the at least the clueless governor and the rest of you lot can pretend to live in your make believe land that he said NO to new taxees and he is showing leadership. Good Grief!
I could fix the problem in 10 minutes - Chapter 9 Baby!
I'd like to see Patrick Gibbons having a fit. Patrick, where are you??
gmag39 : We did get us place out in the middle of the desert away from everyone else. Then you tax and spenders came along and taxed and spent and spent and spent and now you want to tax and tax and tax.
Gmag,
Great post! I would love to just stop taking care of my financial responsibilities. I just hope, that when revenues pick up from these tax hikes, that the idiots in Carson City create a huge rainy day fund. And LasVegas2009, I love the "We the tax payer", line. Taxes here are zero, and you know what sir, when they raise taxes, you are just going to have pull your finances together to cover the 10 bucks a week it will cost you. Just take your own advice.
We would not need to tax if everyone could just take care of themselves. But, and it's a big but, they don't. They don't grow their own food; they don't decompose their own poop; they don't learn on their own; they don't dig their own wells; they insist on driving cars on roads that they did not build or even pay to use.
What a bunch of losers we are! We don't do anything for ourselves anymore. We have become a nation of socialists; we tax ourselves so we can share education, water and sewer expenses. We share the road, pay cops and firemen and women, etc.
We even have elections to decide who will lead our groups into the future. We have rights to eject our leaders when we decide they don't speak for us. Buckley is doing a good job. Gibbons? well, now there is a horse of a different color. "Elect me and I'll do nothing to bring about collaboration, compromise and continuity of services."
Jon Ralston called raising the modified business tax a stupid idea. Frankly it is. It punishes companies for hiring people and paying them well.
If your goal is to raise unemployment and depress wages this is the tax to increase.
Nevada's problem is that it grew the government too fast. Nevada's state and local government grew 40% over the last decade compared to California's 27%. Our government growth rate is simply unsustainable.
We are only setting our state up for slow economic growth, high unemployment, low wages, and another major government shortfall once they blow all the surplus cash after the economy recovers.
http://npri.org/publications/legislature...
Patrick,
you said: Nevada's problem is that it grew the government too fast. Nevada's state and local government grew 40% over the last decade compared to California's 27%. Our government growth rate is simply unsustainable.
Isn't that partly due to the fact that we were a remarkably fast growing state? No Sheeeeet, Our population doubles and our government grows, thanks for the economics lesson. When I had two kids, a bought a bigger house, spent more on food, and got a better car. Why is that a bad thing? You make comments but give no context.
@Patrick_R_Gibbons:
"Nevada's state and local government grew 40% over the last decade compared to California's 27%."
Nevada's population grew by 66.3% from 1990-2000 and another 23.2% from 2000-2006.
What do you think government growth is going to do? Stay the same?
When there are government services that are pretty universally agreed to and desired by a super-majority of citizens (transportation, eduction, public safety), and the number of people who need those services grow at abnormal rates, then government must grow to keep up with demand.
Certainly the private sector grows to pace with demand.
Optimist,
Have you heard of "economy of scale"?
Have you heard of the personal computer?
Did you know that economy of scale suggests that the more units you produce the lower the per unit cost becomes. Translated to government we should see the cost of government grow lower per resident over time. (if the government is efficient)
Did you know that a PC today is just 1/3rd the price of a PC 10 years ago? PC's, today are even faster and more powerful. They allow us to be more productive at a fraction of the cost. Can you imagine what it was like years ago? No PCs, no mechanization. This kind of capital allows workers to do as much as several could many years ago.
Again, we should see the cost of government per resident go down.
If government services were universally agreed upon there would be no need for taxes. People would voluntarily pay for the service when they needed it.
The private sector only grows by providing services people want. Government grows by taking from others.
The economy of scale does not apply here. We need more cops, teachers, and people to manage more people. We are talking about salaries, which are more than they were ten years ago-- Another reason why your point sucks. So please take a moment to explain how to keep society safe for instance when the population goes up 70 percent in a ten year period. Use your economy of scale model and share that with me-- Less cops with more bad guys. Please elaborate.
"Nevada's state and local government grew 40% over the last decade compared to California's 27%"
Wow, the number of state and local government employees as a percentage of state population must be HUGE!
Oh, wait, Nevada's number of state and local government employees as a percentage of state population ranks 50th.
"Nevada's state and local government grew 40% over the last decade compared to California's 27%"
Wow! We must have a TON of local government workers as a percentage of state population!
Oh, wait, the number of local government workers as a percentage of state population ranks 46th.
"Nevada's state and local government grew 40% over the last decade compared to California's 27%"
WOW! We don't have that many local government employees, so there must be a TON of state government workers as a percentage of state population!
The number of state government workers as a percentage of state population ranks 49th.
Economy of scale? The number of state workers as a percentage of state population ranks 49th. Would you stop whining if it were 50th?
First, you don't have any data on the number of either cops and teachers. Second cops and teachers are just a part of government spending. So we can't assume all government does is pay for cops and teachers.
Economy of scale related to government. Let me explain. Lets say you build a road so that 100 cars can occupy it per mile.
Is the cost per car doing to be more or less expensive if you have 100 residents or 20,000 residents?
Ksand,
Think deeper. Maybe we have a smaller work force because they are more efficient than other states?
It can also be true that government has grown 40% while maintaining existing inefficiencies (even though we operate better than other states).
Its a bit sophomoric to assume that just because spending goes up so does the quality of the service.
Great point Patrick. For those that need more education, check this out: http://www.npri.org/publications/spendin...
These spend-n-tax Nevadan Politicians' best be dusting off their resumes and saddling up their ponies.
BTW: My dartboard appreciates the Buckley photo.
"Ksand, think deeper. Maybe we have a smaller work force because they are more efficient than other states?"
Hardy har har.
PATRICK, PATRICK, PATRICK.
You and your lil' NPRI buddies are having quite an exciting week, aren't you, young man.
Do you all have matching pocket-protectors?
Nevada, as Ksand ably points out, is CHEAP.
That is why we're 50th, son. NOT because we're
good.
Think deeper? This coming from the guy who compares two completely arbitrary numbers in a desperate attempt to make a point?
So Nevada's government grew more than California's. It's percentage of population growth ALSO grew more than California's. Just comparing the growth rates of state government means NOTHING without context.
But then, that's why you threw that out there, isn't it? More misleading or context-free statistics from NPRI.
Color me surprised.
Many heartfelt thanks to Speaker Buckley. At last, a state legislator -- dare I say, leader?
-- with enough guts to stand up to the libertarian, big-business, anti-tax crowd.
That mentality may have worked in the wild west in days of yore, but it's completely obsolete for a state with a metropolitan area of 2 million people, including all its attendant needs for infrastructure.
Would someone please answer the question -- WHY should this budget crisis be solved on the backs of state employees, instead of more equitably?
It is unconscionable that the Governor, big-business lobbyists, and out-of-state corporations that pay no taxes at all should tell me that my spouse and I -- just as we're approaching retirement -- should, on top of previous budget cuts and vanishing 401Ks, slash our hard-earned salaries, health benefits, and retirement benefits.
Buckley is an idiot just wanting to continue the bloat in state government. Once instituted, tax increases ALWAYS continue even when the economy improves. Its so transparent. Whats so bad about shrinking state and local government to meet the current state of the economy. WHY IS GOVERNMENT EXPENSE PUT AHEAD OF HOME MORTGAGE PAYMENTS OR FOOD OR MEDICAL CARE FOR CITIZENS????
JUST CUT THE DAMN BUDGET AND STOP ALL THIS WHINING.
How about getting rid of the "war on drugs" and "war on prostitution" to cut the wasteful expenses of government. Both these things are simply idiotic in this day and age. Neither can possible be won through police enforcement, and we have proof from prohibition in the 30's.
Forbidding people from producing, selling, and using marijuana just increases crime through the higher prices the product commands. Prohibition in the 30's provided the funds to get the mafia going strong, and the 'war on drugs' now provides the funds to keep the drug cartels going.