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October 1, 2014

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Teachers union: Business tax would target those not paying their fair share

Lynn Warne

Lynn Warne

The Nevada teachers union filed a business tax initiative today that would raise $800 million a year — an outgrowth of the frustration with the failure of the legislative process to increase funding for state government and schools.

If successful, the petition would create the state’s first tax on business income.

“The Education Initiative,” which is supported by the Nevada State Education Association and AFL-CIO, the state’s largest labor umbrella group, would tax businesses generating more than $1 million in annual revenue.

“Funding for education is inadequate,” said Lynn Warne, president of the Nevada State Education Association, after filing the initiative. “This tax is broad-based and fair.”

The tax, based on a failed Democratic proposal in 2011 and the so-called Texas “margins tax,” would be 2 percent on either 70 percent of a business’ total revenue; or total revenue minus the cost of goods sold or the amount of compensation paid to owners and employees, whichever is less.

Revenue from gambling, which is already subject to a special tax, would be exempt. Mining, which is also subject to a special tax, would not be exempt.

The money would be earmarked for K-12 education, but Warne acknowledged that money could be moved around in the budget to fund other things, such as public safety, health care and higher education.

The margins tax would end Nevada’s status as one of only three states without some type of corporate income tax, a coveted distinction for conservatives in Nevada.

“This margins tax would be a disaster for Nevadans,” wrote Geoffrey Lawrence, deputy public policy director of the Nevada Policy Research Institute. “A business margin tax will only further squeeze struggling private firms, dampening their ability to hire and suppressing growth in wages. This pain will be felt by families across Nevada.”

Warne said she does not believe this would hurt job growth or creation, arguing the tax targets businesses with more than $1 million in net revenue, or those “who are not paying their fair share.”

Warne said the tax is a good alternative to the state’s payroll tax — which the group would work with the Legislature to repeal because “we believe it hurts businesses' ability to hire.”

A repeal of the payroll tax could not be included in the initiative because it would violate the state law requiring initiatives to adhere to a single subject.

The modified business tax, as the payroll tax is called, generates about $370 million a year.

The coalition will have to collect more than 72,000 signatures by November to qualify the initiative. Warne said the union has money for signature gathering.

If successful, it would go to the Legislature in 2013, where lawmakers would have 40 days to pass it, reject it or put an alternative on the ballot. If it’s not passed, it would go to voters in 2014.

The tax would require a two-thirds majority of lawmakers to pass, making it almost certain to be rejected in Carson City. If it goes to the ballot, where it requires a simple majority to pass, the tax would begin to accrue Jan. 1, 2015, and be due Jan. 31, 2016.

The tax initiative has been discussed since the waning days of the 2011 Legislative session, more than a year ago. But a broad coalition of labor, gaming, mining and large business groups never came together.

Warne said she is talking with business groups in an attempt to gain support for the measure.

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  1. Apparently the teachers union & their socialist-minded "leaders" aren't paying attention. Didn't they take notice of what occurred in WI yesterday? Voters told unions, big spenders and tax increase advocates to take a hike. Enough of this "fair share" BS! Let's get government to live within its means just the way we have to do when faced with less money. We cut somewhere and don't go deeper in debt unless we want to hire a bankruptcy attorney. The pencil-pushing, bureacrat drones and their pets, aka, the unions, must get the message and soon. "We're mad as hell and we aren't going to take it anymore!"

  2. Dump the overpaid "administrators" in education and then we can be more reasonable about funding more money for it. So many businesses and organizations are top heavy nowadays, that it's becomming difficult to fund anything. I'm not paying more in taxes so some fat-butt can push papers around and make his/her six figures.

  3. To create a little perspective, which I'm sure will be ignored, let's take a look at the latest figures, 2011, for the "Total Percentage of Taxes Paid" based on yearly income in the state of Nevada.
    (Cited from the Institute of Taxation & Economic Policy, far more reputable than NPRI!)

    Yearly Income : Taxation Level
    Less than $21k : 8.9%
    $21k-$34k : 7%
    $34k-$53k : 6.4%
    $53k-$86k : 5.7%
    $86k-$166k : 4.5%
    $166k-$574k : 3.2%
    $574k or more : 1.6% (Top 1% of Nevadans)

    Ok, back to your regularly scheduled mudslinging and opinionated innuendo! (Remember, if you can't reputably cite it, you're lying.)

  4. I grew up in LV and live here, but my company is incorporated in Wyoming for many reasons. Not only do they not have a corporate tax, but fees are over 50% lower than NV to file, etc, and they don't require or report the owners SS# to the feds, NV does. This new tax would force corps to leave the state in droves, backfiring on the intent. You don't have to do biz in WY to incorporate there, so why not incorporate where you will put the most money in your pocket at the end of the day?

  5. Those who don't pay their fair share?

    I'm pro-teacher but this name calling smacks of dirty politics.

    First lets get a list of all the active teachers in Clark Co who are small business owners. Then lets do a line item report on all the taxes and fees that SBOs pay.

    Then, lets dissect teachers pay and benefits packages and see who's not paying their fair share.

    How much do they pay for health insurance, life insurance; contributions to their retirement, etc. How about all the non-taxable perks like free internet accounts?

    I could be wrong but I wonder if they can stand the comparison to those they want to tar with their name calling.

  6. I am assuming the union wants the money for higher teacher pay, they should just state that. The way the tax is calculated is crazy, on gross revenue, on adjusted gross revenue or a payroll tax, as in the amount paid to the employees and owners. I think they are just throwing a net out and see what is caught in it. Schools are funded thru real estate tax as well, and that is where it should be looked at, or better yet a portion of sales tax, say add 1/4% to the rate so everyone pays not some weird tax on business idea. How about a baby tax? When a new home is built there are impact taxes, when a new baby is born time to pay an impact fee!

  7. MickeyA,

    You are mistaken about the State of Nevada working and reporting to the feds.

    They don't even ask for your SS number and when setting up LLC's in this state they don't even know who OWNS the LLC's.

    If you read the codes regarding Corp's in Nevada you will see they do not play well with the Fed's at all.

    The fee's in Wyoming are less. Wyoming also has some of the highest taxes on their residents and property.

    I do business here, live here, I will pay my fair share here.

    Yesterday the Union said this would raise One Billion over two years, today they say 800 million a year. They don't have a clue what they are talking about. They also stated this was going to be a tax on NET PROCEEDS. Now you can deduct your product cost or your labor cost but not both? That is not NET PROCEEDS.

    The union forgets, business does not pay taxes, customers pay taxes. The way it always has been and always will be. Prices have to reflect the cost of doing business.

  8. It does not matter how much tax is levied on businesses; the state lawmakers will ALWAYS find some way to funnel that revenue into their own pockets.

  9. "(Cited from the Institute of Taxation & Economic Policy, far more reputable than NPRI!)

    Yearly Income : Taxation Level
    Less than $21k : 8.9%
    $21k-$34k : 7%
    $34k-$53k : 6.4%
    $53k-$86k : 5.7%
    $86k-$166k : 4.5%
    $166k-$574k : 3.2%
    $574k or more:1.6%(Top 1% of Nevadans)"

    Sebring? I think those tax figures are dead wrong. Why? I make less than 25K and my tax rate is 16% on my paycheck, more than twice the rate quoted on your source. You might want to ask your friends instead of trusting some propagandish website.

  10. JeniferAD, those rates do not Include SS or Medicare payments taken from your check so your rate may vary.

    If you are paying 16% and SS and MED on top of that then you are being ripped off. Someone making what you are should end up getting 100% back at the end of the tax year.

  11. I am confused. Any company with more than a million dollars in net profits will pay a 2% on those profits. This should generate $800,000,000 in yearly revenue.

    So the total corporate profit in Nevada, not including casinos ans mining is upwards or forty billion dollars? Is that true? What is the total non-gaming/non-mining corporate profit in Nevada. How many companies are pulling down a million bucks in profits?

  12. Sebring says "(Remember, if you can't reputably cite it, you're lying.)"

    Then sir, I have to say that you are lying. Please provide a specific link to your source for this set of "latest figures, 2011" you claim.

    Because the ITEP's most recent report was published in 2009 and the Nevada data in that report was cited as being from 2007" .....and interestingly enough, their 2007 numbers exactly match the numbers you claim represent 2011 values.

    If you check the methodology section of their report you will also find that there are siginificant flaws and assumptions since the figures in their report are not based on hard data, but on a theoretical model they have built to predict what they think the actual numbers might have looked like.

  13. JeniferAD says "Sebring? I think those tax figures are dead wrong. Why? I make less than 25K and my tax rate is 16% on my paycheck, more than twice the rate quoted on your source."

    Really, you can show us a 16% STATE tax on your paycheck? Please give us the details. Keep in mind that the discussion is purely on STATE tax (as are the numbers Sebring inaccurately cited), Federal taxes are not the topic.

  14. http://www.itepnet.org/wp2009/nv_whopays... <-citation (you're move)
    There's the link. For people complaining that their taxes are higher. You are including federal taxes in your figures.

    For anyone truly interested in further cross referencing joy there is also http://www.itepnet.org/wp2009/nv_whopays...

    "So the total corporate profit in Nevada, not including casinos and mining is upwards or forty billion dollars?"
    If you don't include mining and casinos which make up at least 75% of our economy then there probably are profits at or above 40 billion. However, this tax wouldn't exclude those sources, it would actually target them, along with big box retailers like Walmart. Most businesses are NOT making a million in profits. While the ones that are making a million in profits usually are making far greater than a million in profits. Keep in mind these figures are after paying labor and operating expenses. We are talking about companies making over a million in pure profits.
    I'd love to say with certainty how much is make in profits for companies making over a million in profits except that they don't publish those numbers outside individual federal tax returns. (I'm not sifting through millions of those. I believe the petition creators have though.)
    The closest I can get you is the total GDP for 2011 of $116,773,000,000 (116 billion) from http://www.bea.gov/iTable/iTable.cfm?Req...

    Anyone interested in other figures there are a couple decent resources to browse. http://www.lvchamber.com/sites/default/f... & http://tax.state.nv.us/pubs.htm#annual

  15. Sebring "http://www.itepnet.org/wp2009/nv_whopays... <-citation (you're move)"

    Now go to that link for yourself and look. The report title says "Third Edition - November 2009"

    Now go to page 71, titled "NEVADA" and note that it says "State & Local Taxes in 2007"

    Then come back here and try to defend your claim "let's take a look at the latest figures, 2011"

    Remember, you are the one who said "(Remember, if you can't reputably cite it, you're lying.)"

    Having just proven that you blatantly misrepresented five year old data as being from last year, I'd say that "reputably" went out the window....making you, by your own statement...a ?????

  16. And I'd strongly suggest that crimcops and sebring go back and re-read the article. Not sure where either of you got off track, but where does the word "profit" appear the in article?

    The tax would be on businesses with an annual REVENUE of $1 million or more, not a profit of $1 million or more.

    Go look up the definitions of "revenue" and "profit", then come back and try again.