“Fatal blow” speech kind of blows, Guv

Nevada Gov. Brian Sandoval

See, this is why it sucks that the Nevada Democratic Party can’t come up with a quality candidate to run for governor.

If it could, there would at least be somebody to challenge remarks such as those incumbent Republican Gov. Brian Sandoval made at the annual luncheon of the Nevada Taxpayers Association on Tuesday. Sandoval, acknowledging he was “preaching to the choir,” proceeded to trash The Education Initiative, a 2 percent margin tax on Nevada businesses proposed by the Nevada State Education Association, which will appear on November’s ballot.

Apparently, “Sandoval, the association and most Nevada businesses oppose the proposed 2 percent margin tax….” Really? Most businesses are against it? Is there a survey out of which I’m not aware? Because it might be interesting to find out why the 87 percent of small businesses that would be totally exempt from the tax would oppose it, huh?

UPDATE: A spokeswoman for the margin tax opponents wrote in to remind me of the Nevada State Bank 2013 Small Business Survey, in which 74.7 percent of those surveyed said the tax was “a bad idea.” Then again, the survey acknowledged that only 1 in 3 respondents were even familiar the tax. So, fully-two thirds of respondents can credibly said to be speaking directly out of their ass in saying “tax — bad.” Very well, then.  

If Sandoval had a Democratic opponent, he or she might take issue with some of the governor’s quotes in what we’ll always remember as his “Fatal Blow” speech. Like so:

• “All things being equal, we prefer to keep more of our earnings,” Sandoval said. “That facts makes new taxes a tough sell. As such, the proponents of new taxes, like any good marketer, ignore what’s unpopular about the product. Instead, they point to the alleged benefits of the tax, rarely mentioning the costs.”

Well, sure, governor, all things being equal, we’d probably prefer to keep all of our earnings, and pay nothing in taxes. You’re not advocating that, of course, because you’re not one of those Republicans who believes all taxes are bad, and government should be starved to death. So we’re just debating the merits of which tax policy is best.

The problem is, however, all things are not equal. Nevada’s schools — always underfunded — are not getting better, and will not until we make greater and smarter investments in them. This cannot happen without money. So before you go talking about the “alleged benefits” of more money for schools, try to remember that you yourself approved a greater allocation of cash for Nevada’s education system in the last session of the Legislature.

Now, I can’t speak for the other proponents of new taxes, but I can say that I have never shied away from detailing the flaws of The Education Initiative. (Among them: The potential taxation of unprofitable businesses; the disparate impact on low-margin businesses; and the potential for job losses if the tax is approved.)

But the real sales job here is the one being done by the governor, who without mentioning it is advocating to allow some of the largest companies in America to continue to do business in the state of Nevada while paying absolutely nothing on their revenues, the way they do in every state that surrounds Nevada. It’s not entirely clear to me why Nevada’s governor thinks our state shouldn’t raise the same kind of revenues that California, Oregon, Idaho, Utah and Arizona are getting right now for their schools, but that’s a damn good question for him.

If only he had an opponent to ask it!

• “They [tax advocates] force the opponents to make the case and prove why the tax would be harmful or unnecessary,” the governor said. “Speaking out against new benefits is not popular. Hard truths rarely are. … Tax revenues, as we all know, have to come from somewhere, and someone will have to pay.”

Hard truths? You want some hard truths? Well, seek shelter, because I’m about to drop some of those hard truth bombs on you! Nevada’s schools are near the bottom in per-pupil spending. Nevada’s graduation rate, while slowly improving, is still totally unacceptable. Nevada’s teachers are paid less than the national average. And I don’t need to tell the governor that Clark County schools, in particular, struggle with poverty, foreign-language-speaking students and social ills like few other districts. He knows all of that.

So what’s the point? That opponents of the tax have to make their case, just as proponents do? Isn’t that a bit pedantic and obvious, even for “the choir” to whom Sandoval was preaching? The fact of the matter is, The Education Initiative has a very hard uphill climb ahead of it, what with the business community, the gambling industry, Republicans, Libertarians, even a large swath of organized labor against it. If anybody has to make the case, it’s the advocates of the tax.

But yes, governor, somebody has to pay taxes. So why not look at the business community, which has never had to pay taxes on its revenues in this state? Casinos pay a gross gambling tax, in addition to all the other taxes businesses pay. Mining operations (sometimes) pay a net proceeds of minerals tax, in addition to the rest. Residents pay sales, gas, property, real estate transfer, car registration and ancillary services taxes. Hell, tourists pay sales and room taxes, some of which are supposedly earmarked for teacher salaries but which were diverted to the general fund by Sandoval and the Legislature over the objections of teachers. But businesses pay nothing on revenues, and never have, even after studies of the state’s tax system have recommended they should.

You want to be defensive about something, governor? Explain to us why you’re defending that as good policy.

• “Spending is just so much more enjoyable when you ignore where the money comes from,” Sandoval said. “But we must try to resist the easy temptation to forget the burdens of taxation, even when that burden may fall on someone else.”

Because, yes, that’s why advocates created The Education Initiative — they wanted to enjoy some of that old-timey free spending! It wasn’t because they saw cuts to education budgets during the recession. It wasn’t because they were dismayed those cuts came on top of chronic underfunding. It’s not because they think more money could help make schools work better. It’s not because teachers are underpaid for the work they do. It’s not because a feckless Legislature in the unrelenting grip of special interests has consistently refused to enact anything resembling a cogent tax policy.

No, they just want to have fun spending other people’s money! You know, kind of like the governor and the Legislature, when they “swept” money out of local government funds to fill holes in the state budget, holes that should responsibly have been filled by taxes which were made impossible because leaders adhere to bumper-sticker slogans rather than face reality. Man, it must have hurt when the Nevada Supreme Court put an end to that nonsense in 2011, forcing Sandoval to give in to the easy temptation of extending a package of expiring taxes — which, as ever, places the burden more on residents than on business — in order to avoid further cutting his budget!

Residents bit the bullet in 2011, and 2013, when Sandoval again extended those taxes. But businesses should not? Really? Who elects the governor in Nevada again? Oh, that’s right: The Chamber. The Nevada Taxpayers Association. The Nevada Resort Association. The Nevada Mining Association. Casinos. How could I forget?

I wrote approvingly when Sandoval extended those taxes, because it was the right thing to do under the circumstances. Sandoval apparently feels guilty, however, because he noted that he and the Legislature worked to eliminate the payroll tax for 74 percent of Nevada’s business. (And since the tax is based on how many employees you have, the bigger the payroll, the bigger the company, the bigger the tax.)

Well, guess what? According to a look at the tax from Jeremy Aguero, principal at Applied Analysis, 87 percent of Nevada’s businesses would not be subject to The Education Initiative. (Again, the remaining 13 percent that would pay the tax are the state’s largest businesses, accounting for the largest employment.)

• “The margins tax would be the fatal blow to many businesses and that is something I cannot accept,” Sandoval said.

Me, either, but for different reasons. I will not argue the tax will be without consequences. (Aguero, who has performed work for both the Coalition to Defeat the Margin Tax and The Education Initiative, has listed some of those consequences in a report he prepared, although tax proponents question some of his underlying assumptions.) It will undoubtedly have an impact on businesses, and a significant impact on some.

But so would any tax, from a gross receipts tax to a simple business revenue levy. No tax is without some pain. And while the arguments over The Education Initiative’s flaws will go on from now until Election Day, the fact is, other states have revenue taxes, too. And those states still seem to have the Targets, the Wal-Marts, the auto dealers, the banks, the law firms, the Red Robins, the bakeries, the Realtors, the light-industrial manufacturing and all the rest. In fact, those states seem to have more of those businesses than no-tax Nevada does, since our state maintains the second-highest rate of unemployment in the nation.

Will some money-losing businesses be forced to close because they have to pay the tax? Perhaps, but one wonders how long a business that loses money would have been around anyway. Will some Nevada businesses close and move away? Maybe they will. But the odds are — since 46 of the 50 states impose a business revenue tax of some kind — they will move to a place where they will also have to pay a tax on their income. (And in some states, such as California, their employees will have to do so as well.)

The Education Initiative is not perfect, and nobody ever argued it was. It will have impacts. But you know what else has impacts? A school system that fails its pupils, that fails to produce the kind of workers that Nevada needs if it ever really wants to diversify its economy and attract the industries that Sandoval’s own administration says it wants. The fatal blow to hundreds of young people in this state comes every year while leaders sit by and argue about which tax is best, while nothing ever really changes.

That’s something I cannot accept. And nobody else in Nevada should, either, least of all its uncontested-for-re-election governor.





9 Responses to ““Fatal blow” speech kind of blows, Guv”

  1. Nick D. says:

    Thanks for spelling it out, Steve. Without the dedicated funding TEI provides we’ll keep seeing drips and drabs going to programs for some while many others get nothing. I want to know, if the system stays status-quo, who is accountable when one school gets to be Zoom school and another has to make-do? If I’m a parent whose child is in a school getting passed up for programs, new books, reduced class sizes, who is responsible for that “have-not” decision?

  2. Laura says:

    Steve gets it exactly right. Our school system is failing our kids. Brian Sandoval and his donors are doing everything in their power to protect corporate profits, but what is he doing to help our failing schools?

  3. Steve says:

    So, fully-two thirds of respondents can credibly said to be speaking directly out of their ass in saying “tax — bad.”

    OR (and more to the point) it is incumbent the backers of any such plan be certain to make their case as public as possible or lose support they might have had in the first place.

    Of course, this implies the backers actually have good things to sell to potential supporters. In the case of the margins tax this is very lacking as you have also pointed out, Steve!

  4. Angie Sullivan says:

    People of Nevada . . This is not a tax you will pay. Small businesses . . . this is not a tax you will pay. Big money . . . you make billions, you CAN afford to pay. We are talking about very few people and/or corporations this even affects. We will watch those few spend millions and . . . fight fight fight against paying a small something . . . that could help everyone, especially themselves. Let’s think community about the future Nevada and what our children need. We can NOT continue to be small mean and selfish because big money told us to. Let’s vote for this, for us, and those who can pay should pay this time around.

  5. Steve says:

    Oh good, a teacher is for the NEA initiative.
    Color me unimpressed.
    83 grand in total pay is pretty good.

  6. Scooter says:

    Thanks for continuing to hammer away at the hyperbole and hysteria vented by Gov. Sandoval the anti Education Initiative crowd. Transnational corporations have been shipping their profits out of state far too long. Time to use those to generate revenue to build our schools and other infrastructure that helps ensure our common prosperity. Pass TEI!

  7. When JFK signed the Tax Cut Act of 1961 he sez ” A RISING TIDE LIFTS ALL BOATS”…that should be the Governor’s theme for the economy here, namely to GROW THE NEVADA ECONOMY thus growing tax receipts for the state. More taxes mean more burden on job providers…

    Re. School graduation rates, Asians (Koreans, Chinese, Japanese, Vietnamese)in Nevada– remember their forebears built the Rail Road system here 125 years ago executing some of the most death defying work like blasting dynamite in the Rocky Mountain–their graduation rate is about 82%. White students at 80%. Mexicans at 62%. African Americans at 58%.

    We need SCHOOL REFORM to further the progress and not more SLUSH FUND for Union Bosses and their Democrat Party funding…

  8. Margaret Turgeon says:

    The only school personnel that make 83k clear and up are the administrators not teachers. I am tired of getting “grouped” in with admin when media announces “teachers make 83k clear.” Admin receives 83k clear and up not teachers.

  9. Steve says:

    Interesting Margaret…your total pay (which includes benefits and I always consider benefits when deciding whether accept a position. Don’t give me that “benefits don’t count” garbage. Benefits most certainly count and they may even be taxable.) ,,,,your total pay is $98,500.00
    Sunlight on government claims is so clarifying.