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February 1, 2015

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Legislature 2013:

Sandoval’s tax break for business faces opposition



Nevada Gov. Brian Sandoval delivers the State of the State address at the Legislature in Carson City on Wednesday, Jan. 16, 2013.

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Sen. Debbie Smith

Gov. Brian Sandoval’s plan to give a tax break to 2,700 small businesses in Nevada is apparently facing an uphill battle, at least on the Senate Finance Committee.

Several witnesses testified in support of Senate Bill 475 that extends the sunset for two years on a number of taxes approved by the past Legislature during the economic downturn.

But there was no testimony in support of the tax reduction, a separate inclusion in the bill.

Committee Chairwoman Debbie Smith, D-Sparks, raised the issue that tucked away in the bill is Sandoval’s plan for a $24.3 million tax reduction for business.

Bob Fulkerson of the Progressive Leadership Alliance complained the tax reduction “is giving away the store.” He said support to education has been cut by $1 billion in recent years.

After the hearing, Smith said, “I think it’s ridiculous we’re reducing the business tax by $25 million. I don’t hear anyone clamoring for that and my colleagues say they don’t either.”

“I don’t know where the appetite is,” she said.

The current law imposes an excise tax of 1.17 percent on wages paid above $62,500. SB475 raises the base to wages in excess of $85,000.

In his message to the Legislature, the governor said employers continue to struggle with the aftermath of the great recession. He laid out his plan for a reduction and said, “That means since 2011, we will have eliminated the burden of this tax on almost three-quarters of Nevada’s small businesses.”

Smith initially opposed the idea and said, “I’ve got to keep fighting on this because in our environment that’s lot of full-day kindergarten.”

The bill extends for two years the annual $200 fee for a state business license, which was raised from $100. It is due to expire July 1. Mining companies would continue to pay their net proceeds tax in advance by one year instead of paying after they have extracted the minerals.

It would extend the local school support sales tax of 0.35 percent and also the additional tax on the gross receipts from the rental of transient lodging in certain counties.

Jeff Mohlenkamp, director of administration, told the committee that extending the taxes for two years would mean $1 billion in the state budget.

He said this is needed “to meet the demands of state government” because of the significant increases in health and education, in computer needs and salaries for state workers.

Some committee members suggested the taxes be made permanent, rather than just extending them a year. Senate Majority Leader Mo Denis, D-Las Vegas, said he has not heard that the $100 increase in the state business license fee may discourage a company from locating in Nevada.

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  1. It is highly doubtful that a $200 per year small business license fee will discourage any new businesses coming into Nevada. That notion is pretty ridiculous. When one sets up a business, they factor all possible expenses including costs of having that business in the state and county.

    The infratructure needs the funding to insure public safety inspections and protections against consumer fraud. It also deters fly by night and straw businesses from setting up shop here in Nevada.

    Blessings and Peace,