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October 22, 2014

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Jon Ralston:

The tax base discussion cometh (and then goeth)

If you cover politics long enough, especially in Nevada, everything new will seem old.

Elected officials who would require powerful spectacles to be upgraded to myopic. Gaming hegemons who demand genuflection from all strata of elected officialdom. And, of course, Las Vegas mayors named Goodman.

But of all the Nevada memes, surely the most consistent, the most annoying and the most depressing is the lack of serious discussion of the state’s tax structure and the way government spends money.

Studies are conducted, some thorough, some tendentious. Politicians nod their heads, wring their hands and lose their backbones. Cassandras predict Nevada will be hit disproportionately by a recession, it happens and the cycle begins anew.

I am reminded of this as yet another initiative is percolating — there have been plenty in the past few decades — that would broaden the state’s revenue base with a so-called margins tax (which mirrors part of a proposal raised, albeit ham-handedly, by Democrats last year during the Legislature). No idea has ever been entombed more quickly, save, perhaps, Harry Reid’s idea to outlaw prostitution.

What’s most frustrating about what is about to occur is it is so easy to plot the trajectory: The AFL-CIO folks, with assurances gaming and mining are right behind them, present their 2 percent margins tax (details at tinyurl.com/TaxProposal). They gather the signatures by November to put it before the Gang of 63. Legislators, insisting “the people must have a say” and forgetting that people already did by electing them, punt to the ballot. And in 2014, the campaign becomes an absurd, superficial battle royale characterized as one between the forces who would raise taxes and those who would not, with the Norquistian Nabobs of Negativism having a much easier case to convert into sound bites (“Just Say No”) than the Cassandra Chorus (“Education and social services and infrastructure will wither….”).

And guess who wins that one?

Nevada, where battles are born but not really fought.

Thus I both chuckled and winced when the Review-Journal’s veteran capital reporter, Ed Vogel, reported last week that the AFL-CIO was about to circulate the margins tax petition. Vogel also reported that perhaps the most anti-tax guy in the state, businessman Monte Miller, says he wants to circulate petitions to raise gaming and mining taxes.

Now THAT is something new, although it’s an old brinkmanship tactic by the business community that is taxed hardly at all but abhors the biennial targeting of its bottom lines by an unholy gaming-mining alliance. The pathetic cobbling together of a tax plan in 2003, with the ridiculous payroll tax (thank you, chamber of commerce!), still rankles some. It should be abolished (and was phased out in the Democrats’ plan but not in the labor petition).

Miller can’t think increasing gaming and mining taxes would improve what he calls on Keystone Corp.’s website “one of the best business environments in the world.” It’s antithetical to everything he believes in, but there are those who say he’s actually laying the groundwork to collect signatures. Proposals to raise gaming and/or mining taxes probably would pass with landslide margins — and those industries know that, hence the bond of fear.

Such are the political games that obscure the real issues at hand. And the most frustrating — nay, infuriating — aspect of all is that folks of all ideologies know that the tax structure, based on a narrow base of gaming and sales taxes, makes little sense in an economy that needs to shift away from what once made it prosperous.

Many studies have confirmed it. Even the Nevada Policy Research Institute, which proposed lowering the sales tax rate and broadening the base, believes it. And Gov. Brian Sandoval, who ran on a no-tax pledge, has indicated he would look at proposals to expand the base.

As I have written, this is not a difficult question — even though the boom time provided the state a bountiful surplus, government’s profligate ways, including lavishing benefits on public employees, and the wafer-thin tax base eventually came home to roost. I come not to crow about my oracular prowess but to ask, yet again, for some sanity.

Even though I understand the despair of some folks on the left that lawmakers have fearfully avoided the issue, going to the ballot is the only crucible I can think of that is worse than Carson City. The capital is the place to have this discussion and, the more difficult colloquy, which is how much should the state be spending and on what.

But the die appears cast, and I fear what is about to happen as we go back to the past and jeopardize the future. What I hope for most of all — and you don’t hear this often — is that I am wrong.

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