The ink was barely dry on the Nevada Supreme Court’s ruling that allowed the Nevada State Education Association’s 2 percent business tax to go before the Legislature than the dissembling campaign against it began. (Read the court’s ruling in full for yourself here: EdInitiative-ruling. Also, I’ll have more on the impact of the ruling in tomorrow’s Review-Journal.)
State Senate Minority Leader Michael Roberson was out with a quick response today, one that took great liberties in describing the tax. Here’s what he said:
“Today’s ruling by our Supreme Court effectively sets off a timely and necessary debate in Nevada. The legislature, and ultimately the voters, will soon decide whether we create – for the first time in Nevada history – a state income tax on our citizens. We will debate whether implementing an income tax on Nevadans helps create job opportunities, or crushes them. We will debate whether an income tax helps grow Nevada’s middle class, or further smothers it. And, we will debate whether implementing an income tax helps attract new businesses and industries to Nevada, or whether it effectively shuts down such efforts.”
“This is a critically important debate, and one that I’m eager to engage in with my legislative colleagues and with the voters who have given me the opportunity to serve. I am proud to live and work in a state that has – throughout our long history – rejected imposing income-based taxes on our citizens. It is my hope we can keep Nevada unique in that regard and continue with Governor [Brian] Sandoval‘s successful economic growth agenda. For that reason, I strongly oppose this income tax proposal.”
Of course, Roberson knows full well that this is not an “income tax on our citizens.” That’s because “an income tax on our citizens” is prohibited by the Nevada State Constitution, in Article 10, Section 1(9), which also conveniently allows for the very type of tax sought by the teachers union:
No income tax shall be levied upon the wages or personal income of natural persons. Notwithstanding the foregoing provision, and except as otherwise provided in subsection 1 of this Section, taxes may be levied upon the income or revenue of any business in whatever form it may be conducted for profit in the State.
Roberson will justify his remarks by saying that many small businesses are organized in such a way that the proprietor claims profits as income, and thus a business tax is an income tax. Except that, in this case, it’s not: It’s a business, and taxation of business is specifically authorized by the same state constitution that prohibits income taxes on individuals. You could call a toaster a watermelon, but you wouldn’t want to stick a fork in it.
But this is politics, not court, and so Roberson is free to act as a politician and not the lawyer he is in private life. (And speaking of politics, the man whom my friend Chuck Muth derides as “Moderate Mike” for embracing the extension of the allegedly temporary “sunset taxes” in the governor’s budget can’t really hurt himself coming out against this tax proposal.)
In the meantime, I think Roberson is absolutely right in calling for a debate on the subject. Here are some talking points to get things started:
- Debate whether the business tax will help create job opportunities or crush them. All of the states surrounding Nevada have implemented some kind of tax on business revenue, and yet all have more business activity and lower unemployment than Nevada. If having low (or, in our case, no) tax on business revenue helped create jobs, Nevada would be awash in companies and California would be empty. Instead, it’s the opposite. The idea that a business tax will kill jobs is a myth that must be confronted every time it’s uttered, because believing that myth leads to bad public policy.
- Debate whether a business tax helps grow Nevada’s middle class or further smothers it. Another interesting fact: Prices for goods that middle-class people buy are roughly the same in states that surround Nevada as they are here. One would think — based on the dogma coming from the Republicans — that prices would be higher in those states, in order to pass the cost of the levy on to consumers, and/or lower in Nevada, where no need to pass on such a tax exists. The fact the prices are roughly the same tells us that prices is set by region, to accommodate costs on a regional basis. In other words, Nevada is not getting the low-tax rebate you’d expect as a reward for not taxing big retailers. Also, big retailers continue to do business in California, Oregon, Idaho, Utah and Arizona, notwithstanding those states imposing a revenue tax.
- Debate whether a business tax helps attract new business to Nevada or shuts down such efforts. It’s ludicrous to argue that companies such as Apple Computer won’t set up shop in Nevada because of a business revenue tax when Apple’s corporate headquarters are located in high-tax California! Nevada recently landed some Apple operations, but the deal turned not on taxes, but on how much of our store we were willing to give away for the privilege of hosting them. (Answer: A lot.) So long as we’re going to continue to dole out corporate welfare, we may as well have a source of revenue to the general fund for that welfare. But the best part is, if we use the revenue from the new tax — assuming it ultimately passes — to make real and significant improvements to our educational system, we may (like California) start attracting more high-tech businesses without having to waive all the usual taxes, because we’ll have a workforce attractive to those businesses. In that sense, this tax is a key part of an economic development plan, and not an impediment to it.
So, let’s have the debate. But let’s do it in honest terms. See you all in Carson City.