Nevada is not Texas
On Tuesday, March 5th, The Nevada Legislature will be hearing the “Margins Tax Initiative” which was put forth by the Nevada State Education Association (Teacher’s Union). This proposed 2014 ballot initiative would establish a new tax on businesses large and small, this tax is levied against the revenue of a business, revenue that could be used to hire employees or expand, revenues that are allowing businesses to stay open over the last couple of years.
When this initiative is heard, the Teacher’s Union will make an argument that the margins tax is working in Texas but NEVADA IS NOT TEXAS! The margins tax that was implemented in Texas was completely flawed and the amount of revenue that was guaranteed fell short of its expectations. The devil is always in the details and with a petition 31 pages long, snake oil is all that is being sold by the teacher’s union to the people of Nevada. The margins tax in Texas is levied at only half the rate. The Texas legislature heard over 100 bills to amend or repeal the tax in 2009 alone because it was viewed as unfriendly to small and struggling businesses. In other words, it’s wreaking havoc in Texas…which is why no other state has been dim-witted enough to replicate it…Until now.
The Tax Foundation clearly points out the economic consequences of what Nevada will face if this initiative is passed by the people.
To get straight to the point, here are 4 reasons why we need to defeat this tax:
- It’s complex. Gross receipt taxes are much more complicated to comply with than incomes taxes, burdening businesses with lots of calculations to figure their taxable margin and then the tax itself. To give you an idea of how complex Nevada’s margins tax could be, just look at the proposal itself. It’s 31 pages long, extremely dense, and amends dozens of previous laws. Nevada businesses would doubtlessly have to spend extra money on lawyers and accountants to comply with the confusing law – not to mention the cost of the tax itself.
- It hurts struggling businesses. The margins tax would tax the revenue of all Nevada businesses regardless of if they even make a profit. That’s right, a business having a bad year will be still be subject to the tax, which could mean the difference between closing down or staying open in this tough economy.
- Education spending is already out of control. Despite what the Nevada State Educators Association may say about school funding, education expenditures have more than tripled since the 1980’s, surpassing enrollment by 26%. Plus, they’re already getting more. Governor Sandoval’s newest budget proposal increases education spending by $135 million. How much is enough for the teachers union? In this tough economy, Nevada families are already cutting back, yet the teachers union thinks they deserve more. Nevada already outspends a majority of its neighbors on education, but gets fewer results. Why reward failure?
- The margins tax threatens the state’s business-friendly tax code. Nevada’s tremendous growth in population, GDP, and jobs over the past few decades has been largely due to the fact that it doesn’t levy a personal or corporate income tax.
The people of Nevada deserve better and we will not stand for special interests wanting a damaging and reckless tax increase. We will fight the economic stranglehold that this new tax will impose on Nevadans. We will stand with employers, so that they can continue to help pull out of the great recession. We will stand with the employees that may lose the job security they so desperately need. In the best interest of Nevadans, the Nevada Legislature needs to vocally oppose this initiative for the sake of continuing the recovery out of the recession.