Lawmakers hear testimony over corporate income tax proposal

By Cy Ryan

Tuesday, April 12, 2011 | 1:09 p.m.

CARSON CITY – A freshman assemblywoman suggests “the sky will not fall on Nevada” if a corporate income tax is enacted, but a first-term assemblyman says it would dry up investments and cost jobs.

Assemblywoman Teresa Benitez-Thompson, D-Reno, says a bill calling for a 4.5 percent tax on companies that make a profit of $500,000 or more a year would enact a lower tax rate than that of surrounding states.

But Assemblyman Pete Livermore, R-Carson City, said companies won’t create new jobs or expand if the tax is passed.

Their statements came at the opening of a debate before the Assembly Taxation Committee on Assembly Bill 336, which would impose the tax that could yield an estimated $1.2 billion over the next two years.

Craig Stevens of the Nevada State Education Association told the committee the tax wouldn't hurt small businesses. He said Nevada would still have one of the lowest rates in the nation if the corporate tax were passed.

Forty-seven other states have some form of corporate income tax.

Bob Fulkerson of Progressive Leadership Alliance complained that corporations like Walmart and those in mining are taking big profits out of the state and investing them elsewhere.

He said the corporate income tax wouldn't mean a cost increase in the price of goods. He argued that consumers in California pay less for a pair of pants or an appliance than in Las Vegas, but California has a 9 percent corporate tax.

Sam McMullen, representing the Las Vegas Chamber of Commerce, said corporate taxes aren't a stable source of state revenue, adding that allowing companies to use their profits -- instead of taxing them -- leads to new jobs and economic viability to “get our economy humming again.”

Business representatives told the committee that Nevada has the highest unemployment and foreclosure rates in the nation, saying 47 large stores have closed recently in Las Vegas. The shutdown of a major business takes a toll on surrounding small businesses, they said, arguing that more businesses could close if taxes were increased.

Carole Vilardo of the Nevada Taxpayers Association said many small businesses earn $500,000 in profits annually and the bill “does not automatically hit big business.”

Vilardo said the corporate income tax was “volatile” in the money it produced and added there were holes in the bill, which was introduced by Assemblywoman Peggy Pierce, D-Las Vegas. If approved by the committee, it would need a two-thirds majority vote in both the Assembly and Senate to gain passage.