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October 24, 2014

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POLITICAL MEMO:

Nevada’s tax advocates may have an unusual ally in Perry

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Sue Ogrocki / AP

Republican presidential candidate Gov. Rick Perry of Texas, shown here waving after a news conference in Tulsa, Okla., on Aug. 29, could become an unlikely friend to Nevadans seeking to raise taxes here.

Sun Coverage

Steven Horsford

Steven Horsford

John Oceguera

John Oceguera

Texas Gov. Rick Perry could become an unlikely friend to Nevadans seeking to raise taxes here.

On the stump, Perry brags about the “Texas Miracle” — a record of job creation in the Lone Star State as the national employment picture darkened. It’s a message that resonates — especially in Nevada, with our nation-leading unemployment.

A poll released Friday showed Perry leading Republican presidential candidates in Nevada, besting former Massachusetts Gov. Mitt Romney 29 percent to 24 percent.

But another part of Perry’s record could create an interesting dynamic here:

A favorite tax of Nevada liberals and pro-revenue business executives — a “margin tax” — is patterned after one passed by Texas lawmakers with the conservative Republican’s support.

Opponents of such a tax in Nevada — conservative Republicans most likely to support Perry — could be forced into pretzellike contortions: supporting Perry, while railing that a tax like he helped adopt in Texas would kill jobs in Nevada.

The Texas tax passed in 2006 and was implemented in 2008.

Perry’s deputy press secretary, Lucy Nashed, said keeping taxes low is a priority of the governor. The margin tax was a response to a Texas Supreme Court ruling requiring a change in school funding. “The tax rate charged to small businesses is one of the lowest rates in the nation,” she said in an email. “Most small businesses are exempted.”

Nevada’s Democratic leadership, Senate Majority Leader Steven Horsford of North Las Vegas and Assembly Speaker John Oceguera of Las Vegas, were aware of the Texas tax when they met before the 2011 session with business leaders to evaluate ways to raise revenue for the state. Out of the discussions emerged a proposal, a key part of which was a modified version of the Texas margin tax.

Horsford and Oceguera released their proposal less than a month before the session ended.

The plan — 0.8 percent tax on gross receipts over $1 million, with deductions for payroll or other expenses — was the subject of long hearings. Republicans opposed it. The business community was lukewarm.

Ultimately, the Legislature and Gov. Brian Sandoval kept taxes at current levels. The state’s only broad-based business tax is on payroll, which Democrats have decried as a deterrent to hiring.

But the itch to change Nevada’s tax system remains. Many groups, left and center, complained about an impotent or unwilling Legislature. Those groups — labor unions, gaming, mining and other businesses — have yet to form a coalition to advocate for a tax increase. But some promise a fight.

“We’ve decided we need to do something,” said Danny Thompson, head of the state AFL-CIO. “The Legislature is either unable or unwilling to solve this problem.”

Thompson wouldn’t commit to a particular tax or a method of enacting it. Sources close to the negotiations said the tax they settle on will be vetted with polls and focus groups.

Whatever emerges — even if it looks like something Perry has supported — will have immediate critics.

Monte Miller, a prominent fundraiser for Sandoval and former Gov. Jim Gibbons, in an interview called the Texas tax a “mistake Gov. Perry made.”

“He’ll have to answer for it if he runs for president,” said Miller, owner of the KeyState Corporate Management, a business holding company. “For Nevada, it would be a disaster. For Texas, it’s a small rate. But in 25 years, it will be a devastating rate.”

Nevada’s payroll tax is fair because it is tied to the footprint of employees, said Miller, whose business employs 12 people in Nevada and two in Delaware. “It’s their fair share.”

Of Perry, Miller said, “If he can say ‘I made a mistake,’ I could be behind him.”

Perry supporters should expect an argument with anti-tax Nevadans like Miller — no small subset of our GOP — if the Texas governor campaigns here. For Democrats and those who want to see the tax system changed, that’s good news.

As the saying goes, the enemy of my enemy is my friend.

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  1. Hey dipstick, you like how Soros is running our country? It will never cease to amaze me how many people want a "ride", when they own a car.

  2. Perry hasn't created anything in Texas besides a big effin mess. Thinking people wouldn't walk away from this carnival barker, they'd run. Only jobs he'd create in Nevada would be similar to the low wage burger flippin positions only a few landed in Texas. By that time nobody will be able to afford a fast food flippin burger. Read my lips,...no new Texans,...this guy is dangerous,...and no more holy rollers,...again, this guy is dangerous!

  3. I would not get to excited about following the plans of Mr. Perry.

    Texas has the highest property taxes in the country. One of the highest sales tax. They are one of the highest in poverty levels and people on "Government services".

    Yes, he got tons of jobs in Texas, mostly very low paying and he used Federal money to get them. Texas had one of the highest % of Federal money handed to them of any state.

    When you are handed an open check book and put huge burdens on your residents you can make the numbers look good to run for higher office.

  4. Monte Miller should know better - they payroll tax is a stupid tax. It penalizes companies for employing people and paying them more money.

    If you want more unemployment and low wages, implement a payroll tax.

  5. David, FYI (yet again)

    Texas' total tax collection per capita is still lower than Nevada. According to the left of center Brookings Institution (which your boss is a board member of) the total state and local tax collection per capita in Texas ranks them 36th in the nation. Nevada ranks 24th.

    Texas is doing great, DESPITE a tax increase, perhaps ONLY because their taxes were so low to begin with. They would probably be doing a lot better if they never implemented the gross receipts tax.

    Nevada can't raise taxes and expect to do better. We've seen that for 4 straight years now.

  6. Patrick, FYI (yet again)

    You still believe taxes paid by tourists are a burden on Nevada residents.

    According to the Tax Foundation Nevada is ranked 49th in tax burden in 2009 http://www.taxfoundation.org/taxdata/sho...

    Texas is ranked 45th http://www.taxfoundation.org/taxdata/sho...

  7. I think it is also worth noting that Nevada receives 65 cents in federal spending for every $1 paid in federal taxes (ranked 49th)

    Texas receives 94 cents in federal spending for every $1 paid in federal taxes (ranked 35th)

    http://www.taxfoundation.org/research/sh...

  8. Lynn,

    I am arguing nothing of the sort. What I am arguing is that you, and many others, aren't thinking very deeply about the tax issue.

    Every dollar consumed by the government is a dollar NOT consumed in the private sector. When the tourist pays a 13 percent room tax, that money paid on the room tax is money they can't spend on gambling, food, entertainment etc.

    Looking at ONLY the taxes paid by residents does NOT paint a clear picture of the total taxes collected by our government. What you, and others have done, is to mislead the public by claiming our government is underfunded by looking at just a select portion of all taxes collected.

  9. In other words Lynn, Texas governments take fewer dollars out of the economy relative to Nevada. That is a fact. What is also a fact is Nevada's government tax collection ranks about average.

  10. Patrick: "Every dollar consumed by the government is a dollar NOT consumed in the private sector."

    So you are arguing teachers, police, fire, and all other public employees don't spend their paychecks in the private sector. How about the thousands of contracts, worth billions, given to private sector companies. Las Vegas Paving would not exist without government spending. I would argue EVERY dollar in taxes circulates back to the private sector.

  11. Two points come to mind immediately after reading this:

    1. Any tax on business is passed on to the consumer.

    2. Anything coming from the AFL-CIO is suspect at best.

    The reality is this is just another tax on those who pay for goods and services and will always be passed on to the final consumer... us.

  12. Lynn,

    Not at all. You aren't following. While it is true, the government spends the money in some way, it isn't true that the government is spending it wisely. If you had $50,000 and needed a car would you pay $50,000 for a Kia or $15,000 for a Kia and get some other things too. That causes problems. This, however, isn't even the issue I'm bringing up here.

    When the government collects a tax, in this case from tourists, the tourists can't spend it on things they want while in Vegas. The casinos, bars, clubs, restaurants etc in turn can't spend that money to hire new workers, do new things, or just pay the current people more. In other words, the private sector has more to work with and thus can be on stronger footing. This is probably ONE reason why Texas is doing better than Nevada and most every other state.

    THis does come back to the first point above. When the government collects that tax it has little incentive to spend it wisely. Instead we get highly paid bureaucrats (not unlikely to have too many doing 1 job when fewer would do fine) who also get nice benefits. Take education for example, over the last 50 years the number of students per teacher has fallen while the dollars consumed has increased by more than 180 percent. We get more resources per student yet we get no better results (in fact, education is worse). What happens is that the GOVERNMENT IS CONSUMING RESOURCES THAT HAVE ALTERNATIVE USES - this makes us poorer than we otherwise would be because we don't get those alternative uses.

  13. by your logic Lynn (if you would take your logic to its conclusion) we could have a 100 percent corporate profits tax and it wouldn't matter because the government would spend the money anyway and it would go back to the private sector to employ people etc.

    This would be a patently absurd conclusion to make.

  14. Patrick,

    Lets look at the room tax you brought up. The majority of that tax funds the LVVCA. The majority of the LVVCA's budget is advertising Las Vegas using the private sector media. The same person visiting Las Vegas and paying that room tax may have come based on advertising he/she saw.

    Now that tourist has a choice between $200+ per night room or a $30+ per night room. The tourist choosing the $200 room doesn't care about the tax and doesn't affect their spending, as they obviously have plenty of disposable income. The $30 room is more than likely a budget tourist and that extra $4 for room taxes is not going to change their vacation plans.

    Also, why are Nevada casinos expanding into much higher taxed states? (Pennsylvania 50% gross gaming revenue tax vs Nevada's 6.9%).

    Honestly I shouldn't have even responded to you after your absurd conclusion I'd support a 100% tax. I believe in properly funding government AND our capitalist society, they have proven for 225 years to work well together. Corporate balance sheets are stronger than ever and after tax profits are stronger than ever.

    Are there inefficiencies in government? Absolutely, and they also exist in the corporate world and should be rooted out. Overpaid workers? Some yes, some no, same in the corporate world, but you will not find a single public sector worker making millions per year like you'll find at the top of every major corporation.

    Let's also not forget that Texas is doing well for one reason, overpriced oil.

  15. If Texas is doing such a great job creating job's why is there unemployment rate going up?

  16. Fact is Nevada is one of the lowest tax rates on business in America. Which according to the pro corporate crowd creates jobs.we'll were are the jobs that were created by this low tax idealism? China or. India perhaps.

  17. My brother is a Texas lawyer & they love their LLC's. So when our multi-state family wanted to make a few real estate investments, he set up Texas LLCs.

    Things were OK the 1st year, because Texas' stupid net margin tax was not in effect. When it went into effect the website & the forms generated for small businesses were incredibly confusing and badly written. It was clear from the Texas Legislature's b.s. that our little family LLCs should have been tax exempt as small business under the net profits tax.

    As the family bookkeeper I used the wrong form for the first year's net income tax returns. So we got letters from the Texas Comptroller which were incredibly rudely worded & unhelpful. The letters didn't say "You should have filed Form XYZ not Form ABC, please send in the correct form." Instead the letters provided no information at all about the correct form to use.

    So after re-reading the Texas Comptroller's badly written, confusing website, I called the office for help. I was repeatedly connected with condescending, rude men with Hispanic names who refused to provide any information at all. Instead they said "You need to hire a Texas lawyer or Texas CPA". My response was "My brother in law is a Texas lawyer and he can't figure out your forms & instructions." These rude Texas State employees responded "Well then he went to a lousy law school." Yeah, lousy like Duke. So I kept dialing until I got a nice sounding Southern lady on the phone & she told me what form number to file. That only wasted 2 days of my time.

    The next year Texas changed the form numbers, and the same happened again, but it took me 3 days to get a nice Southern lady on the phone.

    At that point, I had enough with Texas, formed Delaware LLC's, merged in the Texas LLCs and merged the Texas LLCs out of existence. I sent in a final Texas small business tax return for each entity.

    Then we started receiving snotty, rude letters from the Texas Secretary of State (appointed by Rick Perry) demanding all sorts of details about our family's small businesses outside of Texas. I sent back a simple letter saying "The entities own no real estate in Texas & do no business in Texas". Deluged with even more letters from the State of Texas, I finally send letters written in 30 point type telling them to F off.

    The Texas net margin tax is a bstardzd system administered by snotty illiterate bstrds.

    The reason I make this point is that the Texas net margin tax is not anything any self respecting business person should support, because it requires the hiring of just as many obnoxious, overpaid State employees as a State income tax, and simply invites a constant barrage of rude inquiries when businesses decide they don't want to do business in Nevada any more.

    I hope Nevada Republicans will heed my words and not follow anything Rick Perry does. Perry was too stupid to foresee the irritating monster created in his tenure as Governor.

  18. I also wanted to make a comment about the Nevada Democrat legislators' obsession with finding out who owns Nevada LLCs and limited partnerships, even though they have no such obsession about finding out who owns NYSE traded companies doing business in Nevada.

    Last month, my Canadian cousins who had a small business in Nevada found out that in order to take advantage of Nevada's home business tax exemption, they had to file some sort of notarized form, which the jerks in the Nevada Legislature decided to require this year. Their daughter got a blue postcard in the mail here in Nevada, demanding this new notarized form on less than 3 weeks notice.

    Canadian investors who live in Las Vegas generally leave town during the summer and go back to Canada because of the intensity of our heat. In my cousins' their part of Canada (Quebec) a "notary" is a provincial official of great importance, who charges high fees and one has to make an appointment several weeks in advance to see one.

    No sane person is going to spend $1500 round trip to fly back to Las Vegas to have a signature notarized by a ridiculous deadline, just to satisfy the Legislators and bureaucrats in Carson City. So my Canadian cousins said "Scru Nevada, we are going to shut down our home based business there." Two ladies in Las Vegas who worked for them part time packing weight lifting books for mailing are now unemployed, and the business will be run from Canada where my cousins deal with polite, articulate, efficient public agencies anyway.

    Nevada used to have a decent level of income claiming it is "the Delaware of the west". It's not anymore. Neither the Secretary of State nor the State Treasurer should be surprised to see more small Nevada business entities simply disappearing.

  19. Talk Talk Talk - but after the election it's an entirely new ball game will surface. What you hear from Rickus Perry during the election, will be what he wants you to believe in order to give him the power to SCREW this UNION GOVERNMENT into the ground.

    Rick Perry is the psychological twin of Jefferson Davis. His objective is to destroy the Union Government with one change: become the leader and SCREW the Government into the ground from the inside OUT, without firing a shot.

    Jefferson Davis was a hog farmer that made good in Politics that was ripe for the times. That's why the Confederacy gave him complete trust, and that's exactly what Texas continues to do with religious lunatics.

  20. I was born and raised in NV and do business here but I incorporated in WY because 1) it cost 1/3 as much form a to z and 2) they didn't require (like NV now) for me to reveal my SS#. Gov has no idea who profits from my WY corp and neither do the greedy lawyers and sue happy people who might someday have a beef with me.

    Taxes have been slowly but surely creeping up here in NV, and if the trend continues, I will move my entire operation to WY and live there during the summers and in Costa Rica during the winters. CR by the way has a sweetheart deal with China, the worlds future superpower along with Brazil, India, and Russia. They allow US corps to keep 100% of their profits (no taxes ) for the first 10-13 years PLUS no tarrifs to import form China. They also are duty free with the US, Americas, etc. Now there's a country that wants our business! BTW, for those of you who believe those of us who create jobs and make over 250K have a moral obligation to fund "bebe's mama" dope habit or feed her 10 kids, you don't understand how the wealthy view the poor in general. The best word I can think of is contempt. This is America! Why do Asians who come here from poor countries (1st generation) "come up" and become wealthy? Because they WORK hard, they take school seriously and pursue higher education, because they become entrepreneurial in nature, and because they reject welfare, they have too much pride. That type of self determination and pride is sadly absent today in most Americans. People feel they are entitled to food, a home, and education, health care, hell, even a cell phone! We are not a communist country (yet), so no, you are not entitles to ANY of those things UNLESS you worked all your life and are now receiving a pension for your live long efforts. The way I see it, unless Ron Paul is elected, this country is going down the toilet and I might as well accept that I'll have to live in Costa Rica for most of the year in the future (dual citizenship) and watch the inevitable outcome bankruptcy will have on this Republic. BTW, mark the date, 2017, by then, the US dollar will no longer be the 'reserve currency" of the world. Wonder how that will impact the value of the dollar?

  21. @refnev are you saying the unemployment rate in texas is not higher then 3 months ago? and as for a low tax state nevada is i am using the right wings talking point that lower taxes create job obviously not true.

  22. How many military bases does Texas have and how much federal money do they bring in to surrounding communties ?

    Just a thought ...

  23. Burritobandit

    Illinois is a big State. And "you know who" also lives in Vegas.