Posts Tagged ‘margins tax’

Nevada Supreme Court Hears Margins Tax Case

By Sean Whaley | 11:37 am December 5th, 2012

Attorneys for the teachers association and state business interests faced off before the Nevada Supreme Court today over whether a proposed margins tax initiative petition has met legal requirements and so should be submitted to the 2013 Legislature.

A Carson City district court judge earlier this year said the petition filed by the Nevada State Education Association to establish a 2 percent tax on companies making gross revenues in excess of $1 million a year was invalid because the 200 word “description of effect” was incomplete. It did not specify how much revenue the tax would generate, said Judge James Wilson in a ruling in October.

A group called The Committee to Protect Nevada Jobs challenged the petition. The teachers association appealed to the Nevada Supreme Court, which heard oral arguments in the dispute today. The court, which met in Las Vegas, will rule later on the matter.

Nevada Supreme Court.

Despite the lower court ruling, the association last month turned in 152,000 signatures, more than double the required number to qualify the petition for consideration by the Legislature.

If the petition is found by the court to have satisfied state legal requirements, the Nevada Legislature will be required to take up the proposal when it convenes in February. The Legislature would then have 40 days to approve the proposal or it would go to the voters in 2014.

The proposed Texas-style margins tax would raise an estimated $800 million a year for public education.

Justice Ron Parraguirre asked whether it is a material effect that a business could face a loss and still be required to pay the tax.

“Isn’t that a material effect that ought to be disclosed?” he said.

Francis Flaherty, attorney for the teachers, told the court the backers of the measure should not be subjected to a “judicial slot machine” where decisions on what to include in the description are subjected to second guessing by the judiciary.

“You’ve only got 200 words,” he said.

Flaherty called the petition “core political speech” that the Supreme Court has said in previous rulings it must do “everything in its power to uphold.”

Justice Michael Douglas asked attorney Josh Hicks, representing The Committee to Protect Nevada Jobs, how the court is expected to pick and chose what to include in the description given the complexity of the proposal, which totals 22,000 words.

Hicks said the 200-word description could very easily be written to be accurate for those asked to sign the petition. He said an accurate description is a fundamental protection to ensure potential signers of the petition know what the measure would do. There is no guarantee that the tax proposal will generate any additional money for public education, which is a material fact that should have been disclosed, he told the court.


Audio clips:

Attorney Francis Flaherty says the description of effect satisfies state law:

120512Flaherty :14 got 200 words.”

Attorney Josh Hicks says there are no guarantees the proposal will increase education funding:

120512Hicks :23 change in it.”




Carson Judge Invalidates Teacher-Backed Margin Tax Petition

By Sean Whaley | 9:56 am October 23rd, 2012

CARSON CITY – A Carson City District Judge today ruled an initiative petition being circulated by teachers to levy a 2 percent tax on companies making gross revenues in excess of $1 million a year to raise money to support public education is invalid.

The Nevada State Education Association said it will appeal the decision to the Nevada Supreme Court and will continue to collect signatures to qualify the measure.

In his ruling, Judge James Wilson found that the description of effect used to explain to voters the intent of the petition is incomplete.

The validity of the petition was challenged by a group of Nevada business groups called the Committee to Protect Nevada Jobs.

Carson City District Judge James Wilson.

“The Committee (to Protect Nevada Jobs) argues the description needs to tell those being asked to sign the petition how much revenue the tax will generate,” Wilson said. “The court agrees the amount of revenue is an effect that those being asked to sign the petition should know.

“Failure to inform those being asked to sign the petition is a failure to explain a material ramification of the initiative,” he said. “The amount of revenue the tax will probably generate must be included in the description. Failure to include the probable amount invalidates the petition.”

The judge also cited several other aspects of the description of effect as misleading, including the fact that millions of dollars of the tax would be directly sent to the Department of Taxation to cover the costs of administering the tax. Additionally, the description of effect does not specify that the tax would also be levied against businesses that are operating at a loss. The judge noted that such an effect would be a major impact of the petition and should have been specified in the description.

John La Gatta, chairman of the Committee to Protect Nevada Jobs, said in response to the ruling: “This petition, which should have been called the Margin Tax Petition, would have greatly harmed business and jobs in our state and not helped our education system at all. Imposition of this tax would greatly harm economic development. We are delighted with this ruling.”

Josh Hicks, attorney for the Committee to Protect Nevada Jobs, said he was not surprised by the ruling.

“We knew that the description of effect was deeply flawed and misleading,” he said. “This is a victory for all Nevadans and should send a strong message that the courts will not allow such deceptions against the public.”

In a statement, the teachers association questioned how Wilson could find the description proper in an earlier ruling in August, but find the same wording flawed in today’s ruling.

“While NSEA anticipated and planned for legal challenges, we also expected consistency in the court’s rulings,” the statement said. “The description of effect, the 200-word summary of the petition, was declared as succinct, straightforward, and not misleading in August and has only been changed in non-substantive aspects and in aspects not relevant to today’s ruling. We do not agree with today’s ruling that is at-odds with the court’s prior decision.

“Through all of the recent economic travails, Nevada voters have understood that our path to prosperity needs to include a renewed commitment to education funding and they are demonstrating that understanding by supporting our referendum,” the statement said. “NSEA’s recently finalized report, By the Numbers, shows that an investment in education is an investment in our state’s economic prosperity.”

The association, which has already collected between 55,000 and 60,000 signatures to take the margins tax proposal to the Legislature next year.

The group has until Nov. 13 to collect a minimum of 72,352 signatures to take the measure to lawmakers. The Legislature would then have 40 days to approve the proposal or it would go to the voters in 2014.

The proposed Texas-style margins tax would raise an estimated $800 million a year for public education.

Wilson’s ruling prohibits the petition from being submitted to the Legislature next year or to voters in 2014.





Carson Judge Will Rule Later On Challenge To Teacher-Backed Margin Tax Petition

By Sean Whaley | 10:59 am October 12th, 2012

CARSON CITY – A Carson City District Judge today heard the latest challenge to a teacher-backed initiative petition that seeks to levy a 2 percent tax on companies making gross revenues in excess of $1 million a year to raise money to support public education.

But Judge James Wilson did not immediately rule on challenges to the “Education Initiative” filed by the Committee to Protect Nevada Jobs.

Carson City District Judge James Wilson.

Josh Hicks, an attorney representing the committee, said regardless of how Wilson rules, the legal issues raised in the court hearing will likely be taken to the Nevada Supreme Court for a final ruling.

In the meantime, the Nevada State Education Association is continuing to gather signatures to qualify the measure for submission to the Legislature in 2013.

Gary Peck, executive director of the association, said between 55,000 and 60,000 signatures have been collected so far from registered voters to qualify the petition. The group has until Nov. 13 to collect a minimum of 72,352 signatures to take the measure to lawmakers. The Legislature would then have 40 days to approve the proposal or it would go to the voters in 2014.

The proposed Texas-style margins tax would raise an estimated $800 million a year for public education.

“We remain confident that at the end of the day, the initiative is going to withstand this legal challenge,” Peck said. “We are certainly going to continue to gather signatures. We have received enthusiastic widespread support from the public.

“We have a study, conducted by Applied Analysis, that shows the costs that would be associated with failing to properly invest in K-12 education here in Nevada,” he said. “And I think the general public understands that if we want to have a thriving diverse economy where we have the kind of high-skilled workforce that we need to attract businesses, we need to be investing in our public schools. And we don’t do that.”

Hicks raised several legal issues during the brief court hearing, challenging whether the petition conforms to requirements that it deal with a single subject and if it offers a clear explanation about what it does. He questioned whether the 200-word description of effect adequately explains to those signing the petition what it would do.

Wilson said he too has concerns about the description of effect.

Francis Flaherty, attorney for the teachers, rejected Hick’s concerns.

“There is nothing hidden in this initiative, your honor,” he said.


Audio clips:

Teachers Association Executive Director Gary Peck says he is confident the initiative petition will be upheld:

101212Peck1 :21 from the public.”

Peck says the association has a study showing the consequences of not properly investing in public education:

101212Peck2 :30 don’t do that.”


Nevada Ranks 3rd Among States For Best Tax Climate For Business

By Sean Whaley | 9:39 am October 9th, 2012

CARSON CITY – Nevada is one of the 10 best states for its business tax climate, while companies in states like New York, New Jersey, and California have a far less pleasant environment to deal with, according to a new report by the Tax Foundation.

“Even in our global economy, a state’s strongest and most immediate competition often comes from other states,” said Tax Foundation economist Scott Drenkard. “State lawmakers need to be aware of how their states’ business climates match up to their immediate neighbors and to other states in their region.”

Nevada ranked 3rd in the Tax Foundation report released today, unchanged from last year. Nevada scored less well in two of the five categories that make up the ranking, coming in 42nd for its sales tax index rate, which is considered high at a statewide 6.85 percent rate; and 41st for its unemployment insurance tax, which does not provide for many benefit exclusions like many states do.

Courtesy of the Tax Foundation.

The survey is a snapshot in time as of July 1, 2012, and so does not include any evaluation of a Texas-style margins tax being proposed by Nevada by the Nevada State Education Association. The association is now collecting signatures to take the measure to the Legislature in 2013, but it still faces a court challenge.

In a press briefing today to announce the results of the new edition, speakers make it clear that Nevada’s high score would be substantially worse with a margins, or gross receipts, tax.

Texas scored in the top 10 in the survey in spite of the margins tax, not because of it, Drenkard said.

“We penalize states heavily for having gross receipts taxes because they are very distortionary,” he said. “It’s similar to having a very poorly structured sales tax.”

The top ten states in the 2013 Index are Wyoming (#1), South Dakota (#2), Nevada (#3), Alaska (#4), Florida (#5), Washington (#6), New Hampshire (#7), Montana (#8), Texas (#9), and Utah (#10).

Many of the top ranking states do not have one or more of the major statewide taxes, such as a personal or corporate income tax or a sales tax. Wyoming, South Dakota and Nevada, for example, have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.

The 10 lowest ranked states in the 2013 Index are Maryland (#41), Iowa (#42), Wisconsin (#43), North Carolina (#44), Minnesota (#45), Rhode Island (#46), Vermont (#47), California (#48), New Jersey (#49), and New York (#50).

The State Business Tax Climate Index, now in its 9th edition, collects data on over a hundred tax provisions for each state and synthesizes them into a single score. The states are then compared against each other, so that each state’s ranking is relative to actual policies in place in other states around the country. A state’s ranking can rise or fall significantly based not just on its own actions, but on the changes or reforms made by other states.

The index enables business leaders, government policymakers, and taxpayers to make an apples-to-apples comparison of their state’s tax system. While some similar studies focus on the total amount residents pay in taxes each year, the index focuses on whether the state’s tax code itself enhances or harms the competitiveness of its business environment.

Despite moderate corporate taxes, New York scores at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes, and the sixth-worst property taxes. The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.

Maine saw the greatest improvement this year, vaulting them from 37th to 30th best overall, in part due to a repeal of their alternative minimum tax. Michigan also made a sizable leap of six places by replacing their cumbersome and distortionary gross receipts tax (the Michigan Business Tax) with a flat 6 percent corporate income tax. This improved their overall rank from 18th to 12th best, and their corporate sub-rank from 49th to 7th best.

The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937.


Audio clip:

Tax Foundation economist Scott Drenkard says a margins tax in Nevada would worsen the state’s Top 10 ranking:

100912Drenkard :26 of Nevada substantially.”:



Poll Finds Nevadans Divided On New Tax Proposal But Strongly Favor Education Reform Efforts

By Sean Whaley | 11:08 am September 26th, 2012

CARSON CITY – The results of a poll of Nevada residents conducted on behalf of the Retail Association of Nevada (RAN) show that 45 percent of those queried believe a 2 percent margins tax on business proposed by teachers will generate the revenues necessary to support public education.

But 49 percent say the new levy, if approved, would raise prices, increase the state’s already high jobless rate and hurt business, according to the poll by Public Opinion Strategies of 500 likely voters taken Sept. 19-20. It has a margin of error of 4.38 percentage points.

Photo courtesy of the National Archives and Records Administration via Wikimedia Commons.

And when asked if money alone will improve Nevada’s public education system, only 22 percent agreed, with 73 percent saying the system also needs significant reforms.

The Nevada State Education Association is currently circulating petitions to take the proposed new tax to the Legislature in 2013, but a legal challenge to the proposal remains alive in Carson City District Court.

The poll found that 59 percent of those surveyed said the amount of taxes they pay is about right, with 22 percent saying taxes are too high.

And 58 percent said the governor and Legislature should raises taxes if necessary to avoid cuts to education and health care, while 32 percent said spending should be cut instead.

RAN began conducting the semi-annual poll in 2009, and many of the questions have been asked each time. In this way, the poll can give not only a snapshot of current conditions, but it can also identify trends by comparing results from earlier polls.

Poll information is then shared with RAN members, the public and state legislators so that the concerns of our state will be considered when policies are shaped in Carson City.

Among the other findings in the latest survey:

- Gov. Brian Sandoval is popular, with 62 percent approving of his job performance. But only 45 percent say the governor understands their problems, and only 33 percent say the Legislature does.

- A majority of those surveyed, 52 percent, say the state should not freeze the defined benefits offered to public employees through the state retirement system, while 41 percent say a freeze should be implemented to save money.

- The survey found that 48 percent of respondents believe that Nevada should opt into the Medicaid expansion provided for under the Affordable Care Act, while 44 percent say the state should opt out because of the cost and because the neediest residents are already covered.

- Asked about the conservative Tea Party Movement, 26 percent of respondents said they had a strongly or somewhat favorable view of the movement, with 35 percent saying they have strongly or somewhat unfavorable views.

Public Opinion Strategies (POS) is a national political and public affairs research firm. Founded in 1991, POS has conducted more than five million interviews with voters and consumers in all fifty states and over two dozen foreign countries.

Gaming Tax Hike Sought As Alternative To Possible Margin Tax Ballot Measure

By Sean Whaley | 1:25 pm February 8th, 2012

CARSON CITY – Las Vegas businessman Monte Miller said today he is seeking a hike in the gaming tax for the state’s largest casinos to offer the Legislature and voters one more revenue option in the face of a possible Texas-style margin tax that could appear on the ballot.

Even at the proposed 9 percent rate on net casino gambling revenue above $250,000 per calendar month, Nevada would have the lowest effective tax rate in the world, he said in a telephone interview today.

Slot machine / Photo by Jeff Kubina @ Wikimedia Commons

Under current law, net casino gambling revenue in excess of $134,000 per calendar month is taxed at a 6.75 percent rate.

Miller, through a group called Nevadans for a Fair 9% Gambling Revenue Tax (NF9GRT) on Tuesday filed a statutory initiative petition with the Nevada Secretary of State that would create the new, higher rate.

The proposal, along with another to provide for a possible increase in the mining tax filed last week, are meant to providing voters and policy-makers with options in light of an anticipated ballot proposal from Danny Thompson, executive secretary-treasurer of the Nevada State AFL-CIO, to create a 2 percent margin tax based on the Texas model to provide increased funding for public education. Thompson could not be reached for comment on the status of his expected tax proposal.

Thompson and the other groups expected to support the margin tax ballot measure have not yet filed an initiative petition with the Secretary of State’s office, but Miller said there is plenty of time to do so.

If you look at Texas, and what they’re going through with the Texas margins tax, which is the template for what Mr. Thompson is doing, it’s a destructive, terribly complex tax,” he said. “And you couldn’t have a worse income tax in your state. And so we think the people of Nevada need an alternative.

Las Vegas businessman Monte Miller.

“This would be the first income tax in the state of  Nevada,” Miller said. “We’ve got to give people a choice.”

Geoffrey Lawrence, deputy policy director at the Nevada Policy Research Institute, wrote an article this week calling the tax unfair to small business and an “abject failure,” in Texas.

Miller said a 9 percent rate is a fair tax rate for the biggest casino operations. The number that surprised him comes from Indiana, where that state collected nearly $875 million in taxes from 11 casinos in 2010. Nevada collected $835 million in 2010, he said.

Indiana’s tax rates go from 15 percent to 40 percent.

“We’re not asking for 15 percent, we’re saying 9 percent, (it) still would be the lowest in the world, the lowest effective tax rate in the world,” he said.

“This initiative represents a 33 percent tax increase on the gaming industry, which would be reckless and irresponsible,” Virginia Valentine, president of the Nevada Resort Association, said in an email to the Associated Press. “We are currently reviewing the language. If this effort is indeed legitimate, we will oppose it vigorously.”

Miller said the proposal is not a tax on all casino revenue.

“If our initiative becomes law, it will not increase taxes on room rates, shows, shopping or restaurants in casinos,” he said. “Nor would it increase taxes on small casinos, taverns or convenience stores.

“Nevada’s individuals and small businesses are overtaxed,” Miller said. “By fairly taxing the billions of dollars that big casinos win from high-rolling gamblers, we can lower taxes and fees on individuals and small businesses who are struggling during these tough economic times.”

The group will have to collect 72,352 valid signatures from Nevada voters by Nov. 13 to send the proposal to the Nevada Legislature in 2013. If the Legislature did not enact the proposal, it would go to voters in 2014 and take effect in 2015 if approved. The Legislature could also opt to put a competing proposal on the ballot for voters to consider.


Audio clips:

Las Vegas businessman Monte Miller says a Texas-style margins tax would be destructive in Nevada:

020812Miller1 :26 in your state.”

Miller says even at 9 percent, the top gaming tax rate would be the lowest in the world:

020812Miller2 :10 in the world.”