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Thursday, Dec. 29, 2011 | 2 a.m.
CARSON CITY — The seemingly constant fight over Nevada taxes will be waged in a new way — with an initiative petition to implement a business tax that would raise at least $400 million over two years.
A group, led by the state’s largest labor union, is finalizing legal language before circulating the proposed initiative, according to sources close to the process.
Danny Thompson
Billy Vassiliadis
The initiative, which would change state law, will be based on the “margins tax” proposed by Democrats during the 2011 Legislature, according to a source. That tax proposal was modeled after Texas’ “franchise tax,” which was levied on business gross receipts.
Proponents will have to collect 72,000 signatures — 18,000 in each of the state’s four congressional districts. If successful, the proposal would go to the Legislature for consideration in 2013. If the lawmakers don’t pass it within 40 days, it will go to the ballot in 2014 for voters to decide.
Advocates for changing the state’s tax structure and increasing the funding for social services and education hope to build a coalition of support among business leaders, gaming, mining, teachers and labor.
But that hasn’t happened yet.
The AFL-CIO, the state’s largest labor union, is leading the way. One source predicted the coalition would eventually be broad. “It will be just about everybody. Whether they’ll put their name on committee or not, I’m not sure,” the source said.
However, the state’s power brokers, including gaming, mining, the teachers union and AFL-CIO, have been talking about changing the state’s tax structure since the 2011 session ended in June. The challenge: to close the state’s budget deficit of more than $1 billion.
At the end of that session, the Legislature re-extended taxes passed in 2009, but did nothing to change the tax structure, which critics say is too dependent on gaming and sales tax.
That led to widespread frustration in the Nevada establishment and a consensus that no tax, even one that was revenue neutral, could pass the Legislature, where it takes a two-thirds majority to raise a tax or fee. (A ballot question only requires a simple majority of voters for it to pass.)
Billy Vassiliadis, lead lobbyist for the Nevada Resort Association and CEO at R&R Partners, a leading Nevada lobbying firm, predicted that labor would be able to collect enough signatures.
Danny Thompson, secretary-treasurer of the AFL-CIO, “has a pretty successful history of qualifying stuff for the ballot,” Vassiliadis said. “So yeah, I would be somewhat confident he’d get that done.”
He said the gaming industry has no position on any proposed initiative.
“There is no quote-unquote industry position. I know several of our folks are frustrated with what’s been an inconsistent base of revenue and the challenges faced every session,” he said. “If you look at the last 10 years, gaming has come to the table a couple times. Some are predisposed (to a broad-based tax). Others will take a more measured approach in supporting tax increases,” Vassiliadis said.
Thompson said he would not comment until the language is finalized.
Initiative proponents can’t file the necessary paperwork with the secretary state’s office to start collecting signatures for the measure until after Jan. 1.
In 2009, when the state faced a massive budget deficit, Democrats waited until the final days of the Legislature to release their tax plans. That was based off the experience in 2003, when former Gov. Kenny Guinn went into the session with a tax plan that was then picked apart.
Although the Legislature raised taxes that year, it did not pass the tax that Guinn advocated. In 2011, Senate Majority Leader Steven Horsford, D-North Las Vegas, and Assembly Speaker John Oceguera, D-Las Vegas, waited until early May, with 30 days left in the session, to propose their $1.2 billion tax package.
Unions demand businesses pay higher taxes so the union members can be paid more. This isn't new. This is so old the voters are sick of it.
As owner of 3 businesses the leigislature should be warned, Atlas is starting to shrug.
As much as I agree with the intent of the petitioners, setting policy, ESPECIALLY tax policy, via a ballot initiative is the wrong way to go.
Something that Union and the public needs to understand is when the cost of doing business goes up, so do prices. Prices go up then you want higher pay to make up for it.
Never ending cycle.
As long as the public keeps demanding that the "government" take care of things it cost is going to rise. It will never stop.
Some hard decisions need to be made and until you find some elected official willing to make them, knowing they will be voted out next time around things are just going to get more expensive.
Once the Union gets these "taxes" in place they will be demanding higher wages to cover the costs to the workers.
This is very exciting news! For well over a century, Nevada has been locked up into a tax structure that served those who wrote special laws into the Nevada Constitution for their own particular industries. Nevada has great wealth in natural resources, and as time evolved, gaming. These industries have enjoyed decades of prosperity and having to pay back a pittance in tax revenues for Nevada. That is the REAL story here, it is NOT about union control as some would suggest, far from it. Very little has been said, in fact, this issue has been silently exploiting the wealth Nevada has, and does not wish any attention drawn to it, unlike union battles, which are always posturing for attention as a tool for power.
Voters and taxpayers have had to bear the brunt of supporting Nevada economically, since these industries have not paid their fair share, only a pittance. That is what the People of Nevada are "sick of" and tired of. This should provide some perspective or backstory as to the history of Nevada's tax structure. The Nevada Citizens only have so much money. It appears, that these industries that have exploited both Nevada's resources and tax exemption loopholes have not suffered as the Citizens have had to. The rich continue to prosper and get richer, while the real victims of this tax structure, are losing their homes, jobs, and families in this travesty.
Finally, some have put light to the subject, encouraging others, especially our Nevada LAWMAKERS, who are just about the only ones during a Nevada Legislative Session, can effectively change the Nevada Constitution. However, IF they are unable to do as the People of Nevada wish, the disparity has become so glaring, that, changes in Nevada's tax structure will come before the People for a concensus vote. There is no turning back, given the tanked economy.
Blessings and Peace,
Star
Comment removed by moderator. Inappropriate
Tax reform is long overdue, both at the State & Federal level, but an initiative for new or increased taxes without direct coupling to significant & real structural reform will fail (as it should).
It's clear that businesses are not moving here because of our low or no taxes. The ones that are moving here are wealthy households, mostly retired, looking to duck income taxes in other states. The issue with the wealthy individuals is that the majority add nothing to the state's GDP, demand services ("I want to live in the forest, now build me a fire station"), and DONATE THEIR WEALTH BACK TO WHERE THEY CAME FROM.
The only way to tap into this non-productive class of wealth is a NON-WAGE income tax.
Oregon, a state with no sales tax, increased their taxes on their wealthy in 2009. Since the tax increase, their increase in GDP is the highest in the west, excluding energy-producing states.
@ First Grade Teacher: Whats with the rich white man comment? Are you racist? Just wondering.
There are 250 millionaires in Congress. The net worth of members of Congress rose 15% from 2004 to 2010. Tje net worth of the average American dropped 8% from 2004 to 2010.
http://www.msnbc.msn.com/id/45793299/ns/...
In 2009, the mining industry had gross revenue of 5.8 BILLION. After deductions, including some that may have not complied with state law, the net profit was 1.8 BILLION. The tax paid to the state of Nevada was 48.6 MILLION. The state of Alaska collects a royalty of 25% on oil. Alaska currently has a 3 BILLION surplus in the state budget, and Exxon just reported record 1st quarter profits of over 10 BILLION, so the royalty payment doesn't seem to be causing the oil companies financial problems. Because of the oil royalty, Alaska has no income tax and PAYS every resident every year from the oil royalty.
The Barrack annual report has just been published, and shows record profits and dividends above the record levels of 2009. This is a link to the report, you may want to look closely at pages 2, 3, and 4. http://media.lasvegassun.com/media/pdfs/...... Net earnings and profits have jumped dramatically between 2009 and 2010. Shareholders return on investment jumped from 12% in 2009 to 19% in 2010. In 2010, the Cortez Hill mine in Nevada produced 1.14 MILLION ounces (31.6 TONS) of gold at a cost of $312 per ounce. In the first quarter of 2011, the mine produced 366000 ounces (11.4 TONS) at a cost of $220 per ounce. Nevada is the SECOND largest producer of gold in the world. Gold is selling for approximately $1500 per ounce. Based on a profit of $1000 per ounce, the profit for the Cortez Hills mine in the first quarter was $366,000,000. Of the profit, Nevada will see less than $20,000,000 based on current tax rates.
No business in Nevada, including Wal-mart, Target, BofA, etc pays any tax on the profit earned in Nevada. The only other states that don't have a tax on business profits are Wyoming, and South Dakota. We need a reform of the tax structure in Nevada. If the legislature refuses to act, then the last resort is for the citizens to act.
The tax laws do need to be changed but they shouldn't be changed by initiative voting. The people of Nevada should not be following California's example of constant initiatives being sent to the voters. We elect representative to do the governments work. If your representative doesn't do as you want, vote for someone that does. On the same token, the state should prohibit Lobbyists from direct communication during sessions with the peoples' representatives. Lobbyists currently have too much political pull in Nevada.
The tax structure isn't broken, we collect more than enough. We spend $9 billion a year. Our spending priorities are off. Government worker unions are too greedy (choosing their own pensions and high salaries over programs for the poor, sick and elderly), our government is too bloated with administrators (despite technological advances we keep adding more government workers per citizen), and corporatists like the LVCVA want more welfare for their limo friends.
PS - we had no real shortfall in 2009. I don't know why the Sun continues to peddle such nonsense.
Democrats were just being rediculous. They wanted an $8.3 billion general fund budget when the previous budget was a "mere" (record setting) $6.9 billion.
We ended up with an approved $6.9 billion general fund budget and Democrats and government workers and their sycophants screamed bloody murder (while the media - yes, RJ too - fell flat on their face and failed to do their job by repeating government talking points without critical thought or cross examination).
The only ballot measure that needs to be brought up is one to remove the special protection for mining from the State Constitution. Put the mining industry on the same footing as every other business in the state. THAT would broaden the tax base in a fair way.
I would also be open to the idea of a special tax on gold that leaves the state, similar to what Alaska does on oil. It is an irrecoverable resource.
a tax on gold wouldn't do anything. People look at the final price of gold on the market and assume its the same price as it comes unrefined out of the ground. Its not how the market works.
Not to mention gold is at a record price and will drop down to a fraction of were it stands now. We'll be right back where we started - a greedy government demanding more and a newspaper parroting more ways to take more.
*update
looking back at my notes I believe it was a $7.8 billion general fund demand in 2009. In 2011 they demanded $8.3 billion then modified it down to $7.9 billion when they were exposed. Both demands were far higher than any general fund in Nevada state history...despite a record setting recession.
For those too illiterate to know Texas' franchise tax has been a complete disaster, for one significant reason. Texas has hired close to 1000 rude, illiterate, unhelpful public employees to administer it.
The Texas state employee morons who designed the Texas franchise tax forms, their instructions, and the "instructional website" created ones which don't match normal accounting principles, or normal IRS tax accounting principles, or normal legalese, or normal English, or even Texas English. Texas has had this tax for about 5 years, and the state employees still cannot get the forms or the forms' instructions into something which the average Texas business owner can understand.
The Texas Legislature has had to amend the law twice to fix errors in the wording. (Can't do that with a ballot measure.)
Trying to help my inlaws file their Texas franchise tax form for their home based business, I repeatedly talked to the Texas Comptroller of Public Accounts office whose moronic public employees who couldn't or wouldn't answer questions. Finally, I said "Your forms are totally incomprehensible and you people are far more un-helpful and uncooperative than the IRS." The rude state employee said "Well you should hire a Texas accountant."
So I shopped around and the minimum fee I found an accountant charging to fill out the darn form was $1,000 for a business where no tax was due. So I call the Texas franchise tax law the "Full Employment for Accountants & Stupid/Rude Public Employees Act".
I'm sure Nevada accountants and wanna-be Nevada state employees are looking forward to "copying Texas" as the story above suggests. I can see profoundly obnoxious Clark County office employees who have been laid off being first in line for the new Nevada State tax jobs.
While the amount of the Texas tax is small, and home based businesses are supposed to be tax exempt, I can report that Texans are moving businesses which are "portable" out of the state, because of frustration with the poorly written instructions for the forms and the obnoxious state employees who "administer" the tax but can't or won't explain their own darn documents.
I urge every Republican, Libertarian & business owner in Nevada to vote against this proposal if it makes it to the ballot. Employers, make it clear to your employees that you will reduce their pay checks to cover the cost of hiring an accountant to fill out the Nevada tax forms and to pay this new tax in this philosophically no tax state.
Nevada is failing miserably in attracting new businesses and new jobs. This new tax will do nothing to help. I bet that some cost-conscious national companies not tied to the gaming industry will move out of Nevada.
It's important to remind everyone that in the early 1970's New Jersey had no state income tax. Once enacted it became a slippery slope and now New Jerseyans pay the highest aggregate state and local taxes in the nation.
if Ksand, a die-hard Liberal, says this is wrong, it is not only wrong it's toxic!
A ballot initiative is the cowards way to legislate.
@Patrick. According to Barrick's annual report, the production cost per ounce at Cortez Hill mine was $220 per ounce. That was the cost Barrick spent to get a ounce of gold, not gold ore, out of the ground. That cost would include the refining costs. Given the world economic situation, I would assume the price of gold would remain constant or increase. The figure of $1000 profit per ounce I used in my earlier post would result in a price per ounce of $1220 which is well below the current price of $1553 per ounce.
http://www.monex.com/prods/gold_chart.ht...
pretty simple..business tax would be a cost of doing business which will be passed on to the consumer...
A gross receipts tax or tax on services will hurt the local economy. As is it a number of California and out of state companies are looking to locate businesses in Nevada due to our great tax structure. Also a typical start up will go to another state if they are forced to pay a corporate tax or a gross receipts tax. The taxes that the mining industry pays are tiny compared to other jurisdictions. The mining tax must be increased. Leave small business alone. We do not want this state to be like California. Who cares what the unions want.
What will plan B be for the tax and spenders if the price of gold were to fall to the late 1990s market value of approx. 285 dollars per ounce and the new revenue raised from the business tax has been squandered on one time money losing expenditures?
The 'more money for the kids' folks remind me of my daze on the family farm when the little piggies would dash from one trough to the next trough when I was putting out their daily ration of slop.
They would squeal and shove to get their share and wouldn't stop fighting over it until it was all gone.
This went on every day until there was no more slop to put out and then guess what happened?
BACON!
@NVFisherman. How many businesses have relocated to Nevada in the past 5 years due to our "low taxes and favorable business climate." I haven't seen very many. Most stop when they ask the question, "How are the schools? Can I get workers with technical skills?"
@pmmart. If the price of gold drops to the 1990 levels, the mining companies will close up shop and stop production because they can't make any money. Do you really believe that will happen. Look at the historical price of gold during any economic downturn.