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Opinion
Dec. 23, 2007
Copyright © Las Vegas Review-Journal

EDITORIAL: A faulty Nevada tax structure?

So why are dozens of other states also facing budget cuts?

An unholy trinity of select Nevada business executives, elected officials and unions are trying to convince the electorate that the state's budget woes are a product of an unsophisticated tax structure. They claim the creation of new levies would insulate government agencies from the hardships of a stagnant economy.

MGM Mirage Chairman Terry Lanni, in response to a teachers union initiative to raise the state gaming tax, wants a broad-based tax that hits all Nevada businesses. KVBC-TV owner and university system Chancellor Jim Rogers wants the Nevada Constitution's income tax ban lifted so the levy can be imposed on corporations and the state's wealthiest citizens. Scores of Democrats and a handful of big-government Republicans support a compromise cocktail of increases on existing taxes and new revenue streams to make sure state and local governments never again have to trim spending in the middle of a fiscal year.

If only we moved beyond our antiquated reliance on sales, gaming and property taxes, they say, Nevada governments wouldn't be subject their third "crisis" of slower-than-anticipated revenue growth in 15 years. Gov. Jim Gibbons is preparing to make $440 million in spending reductions, about 4.5 percent of the state budget.

But Silver State governments aren't alone in freezing new hires, delaying capital expenditures and considering operating cuts. Three recent, independent reviews of state finances have identified revenue shortfalls in nearly half the 50 states. A report released Tuesday by the Center on Budget and Policy Priorities estimates the deficits in 13 states at between $23 billion and $30 billion.

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    • California's budget shortfall could be as high as $14 billion. New York's could total $4.3 billion. New Jersey's could reach $3.5 billion, and Florida's might hit $2.4 billion. Massachusetts is looking into a $1.2 billion hole. Maine, Rhode Island, South Carolina, Kentucky and Minnesota are looking for costs to cut and taxes to increase. Illinois, Connecticut, Michigan, Missouri, Wisconsin, Texas and Ohio are preparing for budget gaps over the next two years.

    Even Nevada's prosperous, fast-growing neighbor to the southeast, Arizona, is confronting the possibility of budget cuts totaling $1.8 billion.

    Of note to Nevada's big spenders: Most of the states facing fiscal challenges similar to Nevada's impose the very taxes coveted by Mr. Lanni, Mr. Rogers and Co.

    New York, New Jersey and California have some of the highest income and corporate income tax rates in the country. Connecticut, Maine, Massachusetts, Minnesota, Arizona, South Carolina, Michigan, Virginia and Missouri have personal and corporate income taxes, too. Florida and Texas don't have personal income taxes, but they do have corporate income taxes. Minnesota, New York, New Jersey, Illinois and Connecticut impose a death tax.

    These "grown-up" states have "broad-based," "predictable" taxes, and they're still short of cash.

    The reality that Nevada's cheerleaders for new and increased taxes choose to ignore is this: No tax structure is immune from the ebbs and flows of our market economy. No tax structure can continue to produce double-digit revenue growth amid the worst housing slump in more than a decade. When workers are socked with higher tax bills or grow worried about their mortgage or job stability, they spend less money. Less money passing between businesses, workers and consumers means less tax revenue for governments.

    Over the past 15 years, Nevada's reliance on sales, gaming and property taxes has allowed state and local governments to grow faster than the economy, faster than the state's exploding population and inflation combined. The state general fund, which funds public education, higher education, welfare programs and law enforcement, has tripled over that period to more than $3 billion per year.

    There is nothing wrong with Nevada's tax structure. Nevada governments -- and those of every state listed previously -- just want more money to spend, plain and simple.

    If the issue is truly a faulty tax structure, why aren't Mr. Rogers, Mr. Lanni, Assembly Speaker Barbara Buckley, Senate Minority Leader Dina Titus and all of Nevada's rich public-employee unions proposing a revenue-neutral overhaul? Why aren't they proposing reductions in the state's gaming, sales and property tax rates to accompany the creation of a "broad-based" business tax? This whole problem is about "revenue predictability," isn't it?

    Nevada governments have plenty of money. An American Legislative Exchange Council report released this month, titled "Rich States/Poor States," found Nevada's tax burden beyond income, property and sales taxes was the highest of the 50 states. The gaming tax more than makes up for the state's lack of personal and corporate income taxes.

    Nevada doesn't need new or higher taxes.



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    Mark D wrote on December 29, 2007 08:28 AM: The American Legislative Exchange Council Private Enerprise Board is comprised of:

    Chairman
    Jerry Watson, American Bail Coalition (bail bondmen)

    First Vice Chairman
    Scott Fisher, Altria Corporate Services, Inc. (philip morris and the tabacco people)

    Treasurer
    Alan B. Smith, Ohio Casualty Group (insurance)

    Immediate Past Chairman
    Kurt L. Malmgren, PhRMA (big pharmacy lobbying group)

    Chairman Emeritus
    Allan E. Auger, Coors Brewing Company

    ….and when it comes to the group’s “Model Legislation”, why it was written by Randy Tompson, of the R.J. Reynolds Tobacco Company!

    Quite the lobbying group of businessmen to ‘honor’ Bob Beers. Then again, they ‘honored’ Nevada’s own Senator Dennis Nolan along with you, and we know what Beers side kick Chuck Muth thinks of him (it's not good).
    So, if you are known by the company you’re honored with?…


    douglas wrote on December 23, 2007 10:43 PM: the root of many states' budget shortfalls seems to be that liberal legislatures abetted by drunken sailor/rubber stamping governors, grant freebies to those who have paid little or nothing into the kitty.

    classic examples are those states which grant "welfare", free education, even "in state" tuition to illegal infiltrators and their offspring. add free health care and, no magic there, the wells quickly run dry.

    the liberals would encumber u.s. taxprayers with a version of the communist yoke. even the mainland chinese are casting that off.

    when traveling abroad, should a u.s. citizen become destitute, they can't easily get paid employment. charity is usually religious based. when tapped out, the u.s. citizen must visit a consulate or embassy for repatriation. the consular official attempts to get funds from "back home"... the citizen's own or parents' assets. lacking those, the gubmit provides a "loan", a one way fare back home. and, the passport is restricted for future travel. why isn't that done when an illegal infiltrator is discovered in the u.s. ? like send them to their nearest consulate and have that gubmit pay to repatriate their legal citizen ?

    what is sauce for the goose is sauce for the gander.


    John F wrote on December 23, 2007 01:48 PM: Thomas L.,

    Are you suggesting we all take out our guns and start killing black people? You like to lecture all of us on how evil and contemptible we all are. You need to take a long look in the mirror. Seriously, are you a Klan member? You ought to be. Why don't you move up to Idaho with all your survivalist racist brethren?


    rick wrote on December 23, 2007 11:24 AM: Sounds like the RJ is concerned it might have to pay a corporate income tax.


    duh wrote on December 23, 2007 11:14 AM: and how about the welfare office at flamingo and pecos..illegals there too..


    Thomas L. wrote on December 23, 2007 08:52 AM: press2forEnglish,
    Do you mean the blacks? They have the highest percentage on welfare and committing crime.

    And it was whites who created the welfare state in the first place. And whites who refuse to lock and load and clean the place out.


    press2forEnglish wrote on December 23, 2007 08:33 AM: And yet nobody , nobody will address the cost if illegal aliens in our state.

    Just drive by the welfare office on Bonanza and Nellis and see WHO all those welfare dollars are going to


    Thomas L. wrote on December 23, 2007 08:11 AM: The Californication of Nevada with high taxes will ruin the state. Better would be to shut down all public schools. Your rotten kids are not my problem.


    Lawrence Hyde wrote on December 23, 2007 07:50 AM: It really doesn't matter how much taxes are raised or what taxes are implemented. Until government, all government, from the smallest town to the federal, learns how to spend wisely and not give in to all the special interest groups there will never be enough money in the government coffers to stay out of the red.


    Steve wrote on December 23, 2007 07:41 AM: Ron sounds like just another ignorant, inept, lazy extreme left-wing liberal who wants the government to provide for his every need or want by over-taxing the working man/woman.


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