CARSON CITY – A proposal seeking to implement a Texas-style business margins tax in Nevada to support public education will be filed with the Secretary of State’s office on Wednesday.
Supported by the state teachers union and the AFL-CIO, if the groups can collect 72,352 signatures by November 13, the issue of taxes will be dumped squarely in the laps of state lawmakers in 2013.
News that the groups were finally ready to file the initiative petition was first tweeted by Las Vegas Sun columnist Jon Ralston.
“Basically it is a 2 percent tax on a business entity’s taxable margin for that year,” said Lynn Warne, president of the Nevada State Education Association.
The threshold for paying the tax is a business making more than $1 million in gross revenue. This threshold is expected to protect small businesses from having to pay the tax, she said.
The proposed tax is expected to bring in about $800 million a year, Warne said.
If enough signatures are collected from Nevada registered voters by the deadline, the 2013 Legislature would have 40 days to approve the proposal or it would go to the voters in 2014. Lawmakers could also offer a competing tax proposal to appear on the ballot, but a two-thirds vote would be required to move any competing tax measure forward in the Legislature.
Warne said she does not foresee any difficulty in gathering the necessary signatures.
“We’re confident that we will not only collect the necessary signatures, which is 73,000, but we will collect significantly more than that and have those ready to be filed with the state by the beginning of November,” she said.
Gov. Brian Sandoval today reiterated his opposition to such a tax proposal. Sandoval earlier this year said he will extend a collection of taxes set to expire on June 30, 2013, into the new budget to ensure there are no further cuts to education.
Supporters of the margins tax say that move doesn’t go far enough, however.
“That’s fine; it’s not adequate though for funding schools and other essential services in the state,” Warne said. “You’ve seen the tremendous battles that have gone on in school districts with regards to funding and how to make ends meet. We just can’t continue to cut funds to education and expect the quality to improve.”
The proposal will provide consistent and predictable funds for education, eliminating the need for layoffs or program cuts, she said.
The association would also work to eliminating the current payroll-based business tax, called the Modified Business Tax, Warne said. But there would need to be a transition period so as not to create a hole in the budget, she said.
Geoffrey Lawrence, deputy policy director at the Nevada Policy Research Institute, said in a statement that a margins tax would be a “disaster” for Nevadans.
“Despite misleading rhetoric from the Left disparaging ‘corporate greed,’ all taxes are ultimately paid by individuals and families,” he said. “A business margin tax will only further squeeze struggling private firms, dampening their ability to hire and suppressing growth in wages. The pain will be felt by families across Nevada.”
Lawrence said economists from across the political spectrum consider a margins tax to be one of the most economically destructive tax instruments available.
“With Nevada’s adult unemployment at 12 percent and youth unemployment rate at 28.8 percent, a margins tax is a recipe for prolonged economic depression in the Silver State,” he said.
Lynn Warne says there will be no difficulty in collecting the needed signatures:
Warne says Gov. Sandoval’s plan to extend a package of sunsetting taxes into the next budget is inadequate: