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August 30, 2014

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jon ralston:

Surprising turn from a conservative think tank

Those zany taxers and spenders at the Nevada Policy Research Institute have proposed a $5 billion solution to the state’s revenue crisis after years of lampooning anyone who suggested broadening the tax base was necessary.

Hallelujah! NPRI has seen the light. Is it an intellectual conversion or a drinking binge?

The serious answer is that the conservative think tank has produced an argument for a revenue-neutral plan that includes a broad-based business tax — a sales tax expansion producing that $5 billion — that unquestionably has some policy merit, yet will be assailed by the left despite its potential to provide a springboard for a real discussion. By excising the modified business tax and the insurance premium tax, NPRI achieves a net budget increase of zero.

For too many years, talk of a more sane tax base has emanated from liberals who want to expand services and bulk up infrastructure. But to have the first real tax proposal come not from those stakeholders trying on their vision spectacles but from their most fervent critics is a real breakthrough, despite any charges (probably true) that NPRI is trying to short-circuit any discussion of a direct tax on business through corporate income or gross receipts.

I care little about NPRI’s real agenda, which is as transparent as the Democratic lawmakers emboldening the Vision Stakeholders Group, which is a déjà vu exercise into discovering the already discovered. Indiana Jones’ services are not required on that quest, folks. This is Raiders of the State Treasury, by whatever means necessary.

Wait, am I starting to sound like NPRI? Forgive me.

I only hope that visceral opponents to NPRI will give the think tank’s latest offering more courtesy than the think tank’s eggheads usually give any proposal from the left, which is slathered with scorn and derision. (Read the new NPRI study here: tinyurl.com/2djh5ww.

There is much whining that can be quickly dismissed in the NPRI manifesto, dramatically dubbed, “One Sound State, Once Again.” The author, Geoffrey Lawrence, mewls about the vision stakeholders and how they were funded and how Democratic legislative leaders have given it a tendentious purpose. Fine.

Stipulation: Yes, it was designed to provide cover for a tax increase, just as those that preceded it. Legislators have a spending reflex. We get it. Next case.

But after that throat-clearing, Lawrence writes what amounts to an admission of reasonableness from NPRI: “Notwithstanding the problematic processes and doubtful constitutionality of IFC actions described above, volatility of tax revenue is a genuine problem for all states and entirely worthy of study.”

So study it Lawrence does, as many before him, reaching his conclusion after the expected lambasting of corporate income and gross receipts taxes:

“Broadening the base of the sales and use tax to include all consumption expenditures could conform with all four of the objectives for revenue reform,” which are revenue volatility, minimal economic distortions, minimal compliance costs and tax equity. Before my friends on the left start bleating about repressiveness, let’s hearken back to the last tax study, helmed by the inestimable Guy Hobbs. Hobbs has always made the point that not only is the Nevada tax base narrow, but one of its crucial components, sales taxes, is also thinly based.

I remember when conservative icon Ann O’Connell, the state senator, and her mind-melded roommate, taxpayers association boss Carole Vilardo, used to rail about tax exemptions. Expanding the sales tax is a conservative idea, folks.

And here’s what some don’t want to remember: In Hobbs’ tax study, an expansion of the sales tax scored the highest when many factors, including equity and transparency, were considered. Indeed, it was rated significantly higher than the gross receipts tax, which the panel ultimately recommended.

(That study also is online here: tinyurl.com/27wxuc5. Go to Section 6 to see the tax proposal comparisons.)

The gross receipts tax was proposed in 2003 as much for political reasons as policy reasons — a desire for gamers and others to directly tax a business community that generally has had a free ride, and still does. But does a sales tax on services necessarily preclude a discussion, too, of a business income or gross receipts tax?

Of course not.

So why not let NPRI’s legacy, its ultimate contribution to Nevada’s tax policy, be the beginning of a substantive debate on a real, long-term solution? The discussion has always started from the left and gone nowhere. If Democratic lawmakers and their leftist allies would at least give credit to NPRI for agreeing to an expanded tax base, maybe the discussion finally will go somewhere. Come on, liberals:

The right is not always wrong.

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