Nevada Legislature: Assembly passes tax plan 30-10
June 1, 2015
ELEMENTS OF THE TAX PLAN
A hike in the business license fee. The fee for corporations would rise from the existing $200 a year to $500, while the fee for the rest of the business entities would remain at $200.
A hike in the payroll tax. Sandoval’s plan raises the state’s existing modified business tax from 1.17 percent to 1.475 percent of wages beyond the first $200,000 a company pays out each year, and 2 percent of those wages for the mining industry and financial institutions. Companies would still get to deduct health care premiums for employees from the calculation.
A “Commerce Tax” on gross revenue. Industry-specific tax rates will apply to businesses with more than $4 million in Nevada revenue each year. Businesses can count 50 percent of their commerce tax bill as a credit against their modified business tax bill — a provision that’s intended as a perk to those who employ people. The commerce tax aims to capture more money from capital-intensive businesses such as mines and those that do business in Nevada but aren’t based here.
A flexible payroll tax rate. The plan allows the state to lower the modified business tax rate if revenues from the new commerce tax and MBT rate bring in more revenue than projected.
An extension of “sunset taxes.” About $600 million of the plan comes from making a set of expiring payroll and sales taxes permanent. It also raises a tax on cigarette packs by $1.
The bill that will pay for the governor's education and general fund budget made it through the Nevada Assembly on Sunday despite passionate opposition from conservative Republicans and did so with a couple of votes to spare.
Senate Bill 483 was amended on the floor to include not only the tax plan proposed by the governor but the language removing the sunset on the tax increases used to balance the current budget.
Altogether, according to Ira Hansen, R-Sparks, the bill would raise more than $1.3 billion from a long list of sources.
The final vote with two Republicans absent was 30-10, overcoming the two-thirds requirement.
All the measure needs now is concurrence by the Senate, which is expected early Monday.
Gov. Brian Sandoval praised the vote as a bipartisan effort.
"The passage of this bill is a testament to the vision, dedication, and determination of the members of the Nevada State Assembly, and represents their commitment to doing what is best for our citizens," he said.
Republican Erven Nelson of Las Vegas said he learned during the session the existing tax system is "archaic".
"It's easy to sit at home and spout the party line and I did that based on my limited knowledge of our state's archaic tax system," said Nelson. "I spouted the party line and I was wrong."
He said since then he has come to believe the plan for educational reform and the budget is "right for our state."
"It better reflects the changing economy of the state of Nevada," he said. "When 70 percent of our economy is services we cannot continue to tax 30 percent. We have to broaden the tax base."
P.K. O'Neill of Carson City said he supports the plan.
"Many of my constituents who work in state government have shared the sacrifice with many of their friends in the private sector," he said. "Restoring the cuts made to them should be part of this."
He said for that and other reasons he is confident this compromise is the best way to move forward.
"Taxes are not easy," said Majority Leader Paul Armstrong, R-Las Vegas.
"We are giving Nevada families the resources and choice they demanded," he said. "The easy way out is no, status quo, but I can't do that. I can't accept what we have today and just keep pushing it forward."
He was joined by Minority Leader Marilyn Kirkpatrick, D-North Las Vegas, who said those who arrived at the Legislature with their minds made up take themselves out of the game. She said she has been working to fix the state's revenue system since arriving 11 years ago and that, "for once I believe 28 of us have the courage to do something right."
But a long list of Republicans opposed the measure arguing it was nothing more than a rehashed version of the margins tax ballot question rejected by 80 percent of voters last November.
Republican Robin Titus of Smith Valley termed the tax plan "a complete insult to taxpayers and the small businesses in the state of Nevada." She said she promised not to raise taxes when she was elected and would keep that promise.
Hansen described it as "a cross income tax on business." He said lawmakers raised taxes $800 million in 2005 when Kenny Guinn was governor and asked what good that did for the education system. He said it makes no sense to just throw more money at education without first studying what is wrong with the current system.
Republican Derek Armstrong of Las Vegas presented the bill saying he was supporting because he was confident in the plan "since we're no longer throwing money at the problem."
The tax plan is designed to generate about $755 million. Along with the language continuing the sunset tax increases, it will bring in more than $1.3 billion to balance the total $7.4 billion General Fund spending plan proposed by Sandoval.