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Sunday, Jan. 17, 2010 | 2 a.m.
Harry Reid
Sun Archives
Beyond the Sun
Maybe all Nevada Democratic politics aren’t about Senate Majority Leader Harry Reid’s re-election after all.
The Progressive Leadership Alliance of Nevada plans to try to amend the Nevada Constitution to force an increase in the tax on mining rather than banking on legislative action in 2011.
Liberals have long complained that Nevada’s mining industry does not pay enough in state taxes. With gold prices soaring while the rest of the economy craters, the calls for mining to pay more have gotten louder.
As PLAN had been gearing up last month to pursue a constitutional change to make that happen, the idea ran into what seemed to be the immovable object of Democratic politics: Reid’s re-election. The concern was that a mining tax initiative on the November ballot would hurt Reid’s chances by drawing anti-tax, rural voters to the polls.
So PLAN’s board of directors decided to seek mining tax changes in the 2011 Legislature, even though that would have left the proposal subject to more than a year of political pressure from the powerful mining industry.
PLAN is to announce Tuesday, however, that it is returning to its effort to collect 97,000 signatures to allow voters to decide in November whether the state should tax “gross” mining revenue instead of just “net” revenue.
So why did PLAN revert to its original plan? Bob Fulkerson, the group’s executive director, said his board held another vote.
“We don’t think it’ll hurt anybody, Democrats or Republicans,” Fulkerson said. “Frankly, we’re just going to do it.”
Some Reid supporters disagree.
“Usually it’s not smart to turn out people who aren’t friendly to your side,” said Billy Vassiliadis, a Democratic kingmaker and adviser to Reid.
Vassiliadis’ advertising and lobbying firm also represents the mining industry.
Asked why he believed PLAN is trying to get on the November ballot, Vassiliadis gave two scenarios: “To give them the best of it, maybe it was triggered by increasingly negative state revenue news. To present the more cynical view, they’re looking for relevance and attention.”
Fulkerson argues that having the measure on the ballot will give the Democratic base another reason to go to the polls, in a cycle that has historically belonged to the opposition party.
He acknowledged that some of the groups that sit on his board, including labor and environmental groups, abstained from voting. But, he said, “We were able to convince them not to block this going forward.”
Liberals have long maintained that the only way to enact lasting change is through the constitution, though such a change would have to be approved in 2010 and 2012 before it could become law in 2013.
To help Reid — or at least in an attempt to anticipate what people thought Reid wanted — many thought PLAN would keep it off November’s ballot. But the news, broken by Las Vegas Sun columnist Jon Ralston on Thursday night, caught many atop Nevada’s Democratic power structure off guard. And they were not pleased.
“Nobody really wants us to do this,” Fulkerson said. “Mining has a lock on the state’s political structure. The power of the mining industry pervades Democrats, Republicans, established organizations. But we think there’s a grass-roots constituency out there that wants to see it happen. We’re going to throw our dice.”
An industry, it seems, has grown around trying to anticipate what Nevada’s most powerful politician wants or feels. But what does Reid himself think?
Reid spokesman Jon Summers had an interesting answer: “Without seeing any proposed language, we can’t give a position. But Sen. Reid believes any effort to increase royalties should be balanced with greater certainty for our mining families and mining towns.”
I believe they want to raise the mining tax from 1.5% to 5% for ore taken out of the ground. It would bring a great deal of money into our states treasury. Some of the mining cos. are from foreign countries making millions and millions from the ore taken from our soil. A few months back when Harry Reid was asked if we should tax these mining cos. more his reply was that we should wait till after this years election. Is this where he plans on getting part of his $25 million cache for his campaign contributions, from the mining cos? Is he counting on getting his votes from the mining towns and doesn't want to upset the miners?
Harry you've been playing ball with the big corporates to long. It's time to take care of your Nevada citizens, and the citizens of the U.S.A.
Mr. Vassiliadis and R&R Partners represent the mining industry; their allegiance has always been to the dollar bill--not to the long term health of the state. I'm sure they tried every which way to kill this initiative before it saw the light of day.
As for this bringing out 'the other side'...guess what? They are already very intensely motivated! As a disaffected Democrat with not a lot of motivation, this will bring me to the polls in November! Where do I sign?
The state of Nevada has too much money to waste now. Let the miners keep what they earn. Don't give it to the government parasites.
Reid gets a ton of money from mining.
This really puts him into a bind.
Is he going to come out against the measure?
jlb this is not to tax the miners, this is to tax the corporations owning the mining cos. who are now only paying 1.5% tax on billions of dollars of precious ore taken out of Nevadas ground.
no let tax mining fars as i know they never been tax
About time.
Gordon: I agree with you. The RJ ran this story the other day, and someone said that taxes raise costs to consumers. That may be true with some businesses, but I don't see how that could be true here. The mining companies here do not sell a product directly to NV residents. And you're correct - they're not going to just up and leave and take their business elsewhere. (Even if they wanted to, it would be too costly to remove everything and do the clean up. They'd sell it to someone else who would happily pay a mere 5%.) And they're not going to lay off workers because you need human beings to do the mining.
I also agree with other bloggers who say that Reid, Gibbons, and probably everybody else are owned by the mining companies. I'll be amazed if a single candidate for any NV office speaks out in favor of this initiative.
I am OK with an increase tax on mining but it is dumb to think it has no effect.
Any cost increase has an impact on the decisions that the companies have to make.
If they can't pass the cost into the marketplace because their competitors do not have the same cost increase then that impacts such decisions as to expand or contract their business.
If they do pass the cost into the marketplace then it means the consumers pay the tax and also causes displacement in the goods and service that they purchase because they have less money to buy things.
Here is an example of the impact on business decisions. Some potential mineral deposits are harder to extract. That makes those deposits less profitable. Increase taxes may cause the mining company not to mine those deposits because the profit margin might be so thin to be not worth the risk.
So therefore the mining tax increase may reduce employement in mining.
It is foolish to believe that tax increases have no impact on the economy.
Government is very inefficient in what it does. For example, it may take 2 or 3 people to answer phones for department in government. In the private sector with the same inbound call volume they would do with one person. It is not a great place to invest in.
First sensible reform to come down the pike since dirt was new. Natch, Gried will oppose it but he's already in the history books so he's no longer a factor.
SgtRock - the BIGGEST threat to mining jobs will come from robotization which the mining companies are already working on hard and fast (especially in Australia). Within 5-10 years, the trucks will be driven by GPS and the mills will be completely computer operated from ore to ingot. The profits will rise as will production but the loss of jobs will not be because of a minor, justifiable tax increase.
The overriding question is what will be done with the money? Will it just pay for more limos and jets for the gubber or be used to make our universities better so we can finally attract non-gaming and non-mining employers?
I don't believe that raising the tax on mining will automatically get passed to the customer. Gold is not a utility that people absolutely must purchase, instead the laws of supply and demand determine price. If the price rises too high, then demand will drop and consumers will not purchase it.
Gold costs $200 to $400 an ounce to mine and process, depending on location and other factors. With gold hovering around $1,200 an ounce, I doubt we will see the mining corporations cut back.
The product, by the way, is mostly destined for jewelry and Middle Eastern dowries. Nothing against marriage traditions in West Asia, but we only get one chance to benefit from this non-renewable resource which is RAPIDLY DISAPPEARING from Nevada's rugged mountains. If we do not force the out-of-state and foreign-based corporations to pay now, we will never have a second chance. Unlike every other business out there, the infrastructure they create is temporary. That's why this state is littered with ghost towns. I'm sure the corporations would be happy to let Elko and the rest of rural Nevada go the same route - and that's why those guys have to contribute now.
STATEMENT: "Sen. Reid believes any effort to increase royalties should be balanced with greater certainty for our mining families and mining towns".
TRANSLATION: Sen. Reid has taken a fortune in campaign contributions from the mining industry who want things left just the way they are. Therefore, he will do his best to derail any efforts to increase mining taxes.
The mining industry will be here only as long as there is something worth taking out of the ground. As soon as they have exhausted the resource, they will pack up and go elsewhere.
Senator Reid, there is only one certainty for mining towns and families. When the resource is gone, the mining corporations will also be gone, and the jobs will also be gone. Your towns will look like so many other ghost towns in Nevada that suffered the same fate.
Yeah, what perry said
I'm pretty sure Reid will support what is best for ALL Nevadans, which is what increasing revenues will do... They've never paid their fair share and it's time for them to do so. This initiative will turn out voters who want to see more revenue over more cuts in government services- and those voters FAR outweigh the "cut to the bone and disable government" types.
I say kudos to PLAN for standing up to the political forces and lobbyists in this state that have been protecting a very profitable industry for years.
And to repeat, I believe Senator Reid will vote for this initiative because it is the RIGHT thing for Nevada.
go to gold mines in nevada, find out how many mines are owned by corporations from foreign countries. These corporations have been getting away with paying 1.5% tax on all ore taken out of our soil. The point is these corps should be paying 5% tax on what they take out of our Nevadan ground.
Foreign mining companies making billions on their ore only to pay thousands on taxes. Our state could use the extra bump. We will have to write a new chapter in our States Constitution on mining taxes. Harry wants to wait another year until after the election, that will benefit the mining companies and our state will lose the new profit. Yeah Harry is a real Nevadan.
Thats OK Harry, our states economy, states jobs, unemployment insurance, etc, can wait for another year until you think we have got any kind of problem here in Nevada. The fact that you are our Senator AND the Senate Majority leader, you would somehow make us as Nevadans feel some kind of pride and security that we had you to take care of us in Nevada, but Harry, you've left us in the dark too long and the chance that we have trust in you is "no way". I've been trying to tell you Mr. Reid your lies are bad enough, its when you start by giving away our rights to federal criminals, one at a time, we the people will be paying for their way. Tax the citizen so we can cover the expenses it will cost to make new citizens.
Do you realize we are paying for our own demise? Harry if you're as intelligent as you think you are you should put your tail between your legs and run like hell Harry. The damage is done...
Taxing the foreign owners of the mining corporations can bring in some nice revenue, too.
"I'm pretty sure Reid will support what is best for ALL Nevadans, which is what increasing revenues will do"
Uhhhhh....I don't think so.
He gets a ton of money from them.
When are these stupid legislators going to understand that their great equalizer, taxes, only hurt businesses. What is will they have left to tax when everyone is gone. Nevada isn't growing like it used to. Liberals love to say that conservatives offer no suggestion (which is not true) but liberals refer to taxes to fix there problems.
I just wonder what would happen if people were in a race. Would the a liberal judge break a fast persons leg so a slow person would catch up.
jr99, this is less about taxes and more about repealing the overly generous deductions that mining gets in the state of Nevada.
They are able to deduct almost all expenses, unlike every other industry in the state. Our mineral resources are finite. Once we dig the gold and silver out of the ground -- that's it. Nothing left for us, so we may as well benefit as a state from our resources.
There's the Net Proceeds on Minerals tax that is enshrined in the state constitution. I don't even think that needs to be changed. But the Legislature (both parties) have allowed these companies to deduct almost everything. It's unfair to burden all other businesses when mining isn't paying its fair share.
Reducing or eliminating the deductions could be offset by a reduction in the sales tax. That would benefit all Nevadans and let our natural resources pay for progress.
When a foreign mining co. comes into the U.S. and sets up a mining camp, It's an industrial sized operation. These foreign companies extracting precious ores from our countries earth are collecting billions and only paying dollars in taxes to our state.
What is the american profit involved?
Who in the U.S.A. is making the profit?
Are the companies doing the mining paying anything to the State of Nevada? or are they paying anything to any private entity?
Inquiring minds want to know!
Mining, whether coal, or precious metals, has never paid its fair share of taxes.
Dingy just needs to hang on to Nov and then what ever is left in is bribe pot uhhh re-election fund he can go and get himself a nice fat juicy lobbing job down on k street making 8 figures. Belive me every slime dog corparte swine will grovel at his feet for years to come and pave thier way with american gold as the dollar bill isnt woryh wiping with anymore. Although Ive heard that saudi money is really wothwhile and the euro is really working well for Dingy.
"Reducing or eliminating the deductions"
They can not eliminate for that would violate the explicit wording in the Nevada Constitution that states that it is a net tax. Eliminating the deductions would make it into a gross tax.
They may be able to tweak or reduce some of the deductions but not that much for that also would violate the explicit wording in the Constitution.
That is why this liberal group is pushing for the change in the Nevada Constitution.
Democrats are all about raising taxes, always have and always will when elected. How can they support their excessive spending without the continual pushing the little people to pay for their recklessness. Our screwball senator is in trouble because he is bought and paid for by groups like the mining industry and unions. Let's send a message loud and clear to these dirty politicians and vote all these incumbents out in November.
It is imperative that everyone realizes that our state's growing deficit is not going to fix itself. We all need to work together to ensure our survival by keeping our resources/money in the state. Since it is apparent that the majority of the mining profits are leaving our state, it is reasonable and just to raise the taxes. One and half percent is ludicrously low. It is NOT about Democrats or Republicans- it is about Nevadans! Where do I sign?
ksand99,
I appreciate you view and I do like the way you explained yourself however I am against taxes across that board. I do not gamble but I did vote against the room rate hike because I believe in the invisible hand of economics without government intervention. I do believe that government should take care of infrastructure but that there should be a flat tax and no more political favorite games. I also believe that any business that receives government money through contracts or bailouts should not be allowed to donate to election or reelection campaigns.
We should have not place for political games that Reid has benefited heavily from.
How is this news? PLAN always advocates for a mining tax. PS, PLAN wants a gross reciepts tax on mining, mining is already taxed.
Launce,
Gold is at a high price because the dollar is weak and the US economy stinks. It will drop in price as we recover (gold is a safety net when the global economy goes sour). Thus, the tax will not generate the revenue Launce and PLAN want. They'll just go after some other tax increase and I will get to say "I told you so."
Notice their ideas are always more taxes, never about how to do the same job smarter?
The only reason the mining tax is wanted to be raised is because it is so low as it is now. They want to raise it from 1.5% to 5%. This will not cost any individual american. This will cost the foreign mining companies who have been getting Nevadas prescious ores for next to nothing. Silver, copper and gold. It's a good thing for our state as we need a extra monitary lift to help our state out of the economic slump we are in.