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Legislators debate corporate income tax bill
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LAS VEGAS REVIEW-JOURNAL CAPITAL BUREAU
Updated: Apr. 13, 2011 | 10:13 a.m.
CARSON CITY -- Anti-tax advocates on Tuesday ripped a bill that would impose a corporate income tax in Nevada.
Assembly Bill 336, part of a four-part tax increase proposed by Assemblywoman Peggy Pierce, D-Las Vegas, would levy a 4.5 percent income tax on businesses earning more than $500,000.
Proponents estimated it would bring in $1.2 billion over the next two years, enough to replace many of the cuts proposed in Gov. Brian Sandoval's budget.
During the hearing before the Assembly Taxation Committee, Republican legislators denounced the bill, while Democrats said it was necessary to fund education and other services.
Because Sandoval and every Republican legislator oppose tax increases, the debate seems to be academic. Democrats are a few votes short in both houses of the two-thirds total needed to impose taxes and to override the governor's veto.
No action was taken Tuesday.
"Our current structure is creating a generational divide of the haves and have-nots," said Craig Stevens of the Nevada State Education Association, which commissioned the analysis of the revenue that would be produced by the corporate tax. "The question is soon going to be, 'Did you go to school in a boom or a bust period?' "
Stevens said businesses have a responsibility to reinvest in the state's infrastructure. He noted that every state except Nevada, Wyoming, South Dakota and Washington has a corporate income tax. Nevada does have a payroll tax.
"Doing business in Nevada is considered a privilege," Stevens said. "In order to make money off the hard-earned dollars of the workers of our state, that should come with a price."
Assemblyman Pete Livermore, R-Carson City, took issue with the statement and said Nevada should seek to accommodate businesses that are doing it a favor by creating jobs.
Opponents say businesses would have to absorb the additional cost of the corporate income tax, and the easiest way to do it would not be raising prices but laying off workers or lowering wages.
During the hearing, Progressive Leadership Alliance of Nevada lobbyists displayed jeans, detergent and other items they said can be bought in Walmart stores throughout the country.
The jeans are $2 more expensive in a Reno Walmart than in a Walmart in Idaho, where the company must pay corporate income taxes, said Bob Fulkerson, president of the umbrella advocacy organization that represents more than 40 liberal-leaning groups in Nevada.
Walmart "isn't going to jack up the prices of goods in Nevada" if legislators impose a corporate income tax, he said.
Carole Vilardo, president of the Nevada Taxpayers Association, said many sections of the 40-page bill are unworkable and perhaps unconstitutional, including a clause that would prevent businesses from challenging their tax bills.
She said a business income tax is an unstable source of revenue and pointed out about a dozen problems with the bill that should be corrected before it is processed.
The bill links the state taxes to the amount of federal taxable income reported by a company, Vilardo said. But one section asks businesses to guess the taxable figure they would have reported to the IRS.
The bill also has conflicting dates when the taxes would be due.
Vilardo also noted there was no indication in the bill whether the Legislature intends to keep the current business payroll tax law.
Nevada levies a 1.17 percent payroll tax, which comes out to about $600 a year on employees earning $50,000. That tax will be cut almost in half on July 1 unless reauthorized by the Legislature.
Assemblywoman Teresa Benitez-Thompson, D-Reno, repeatedly challenged opponents who predicted dire consequences if the bill becomes law.
She said most states have a higher corporate income tax than the 4.5 percent proposed in AB 336.
"The sky isn't falling in Utah," Benitez-Thompson said. "I want to know how the sky's going to fall in Nevada when this rate is lower than other states."
The Associated Press contributed to this report. Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3900.
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I do taxes for a living. I can tell you that Corporate Income Taxes are about the least efficient way to generate tax revenue for a state. No matter what the rate, you have to build a new expertise in the Department of Taxation for Income Taxes.
You have to develop new forms and hire a huge number of auditors (more state employees, hurray!) to go out and examine the corporations subject to the tax. These auditors would not be limited to the state of Nevada. You either have to pay to send these folks to Massachusetts, Florida, Oregon, or wherever else corporations doing business in Nevada are based so that you can do the audits.
You also have to create more bandwidth in the court system to handle all of the new disputes that will arise over apportionment, allocation, exemptions, etc.
We would be much better off bumping up the rate of one (or more) of the existing taxes (e.g. sales/use tax, motor vehicle registration, payroll tax) or creating a new bracket for certain transactions (i.e. a "luxury tax") than hiring a ton of new public employees to administer a totally new type of tax.
Firestorm
So all you alleged business owners, what state are you going to run to? 48 states already have higher business tax rates than Nevada. The only one lower is North Dakota. See ya, hope you enjoy the new found profits from your landscape, or pool business up there in cold country!!
Stevens said: In order to make money off the hard-earned dollars of the workers of our state -- that should come with a price.
These guys are complete throwbacks to the Soviet Kruschev era. It's always the same story with these communists: nobody should earn a living except themselves.
I do rather admire that Peggy Pierce. She, along with Parks and Shneider are certainly not bashful about showing their true colors.
These leeches are just anti-capitalists and BIG Government true believers. If we slaughtered the public education beast they would find some other government spending program to take its place -- and demand that we ratchet it up to consume 50% of the biennial budget.
If Your Business is so Marginal that it can only survive in a State where Taxes are as Low as they are in Nevada, Regulations are as Non-Existant as they are in Nevada, Your Wages are as low as Possible and You don't provide decent Benefits to Your Employees - Please GOOGLE MAP directions to Mississipi and ADIOS!
Nevada politicians need to Figure out how to attract Top Wage Industries that create a quality of life for their employees and the community. HINT: There is no Low Educational Area and LOW TAX area that has EVER been able to accomplish that goal - and petty Name Calling does not change the facts.
Meanwhile mines keep on taking their obscene profits out of state......good job politicians you are doing the job that mining is paying you for! Of course, you aren't doing the job that the State of NV pays you to do but then that pays so little that I can see why the mines win hands down.
REMEMBER - REMEMBER - REMEMBER...
DUMP this clown: Assemblywoman Peggy Pierce, D-Las Vegas
thats LEARN
Though I hate to see the huge cuts to education, it doesn't matter how much you spend trying to educate some of these dullards.
With some students using school to socialize and parents using it for daycare, there are some kids that just aren't going to earn much.
4.5% of $500K is $22,500. That's the janitorial service and the plant lady. Or, I could get rid of the receptionist. It's your call Ms. Pierce.
Remember n7v.blogsports teacher to student ratio is 1 to 300,000. Classes will be held in the nearest open field. Any questions about his knowledge was answered in that ratio.