Various groups around the state of Nevada are now engaged in a battle of tax initiatives. Nothing new.
There have been pushes for this tax or that tax in the name of fairness, but mostly in the name of more revenue to spend on public employees and their myriad bureaucracies, which provide such vital services as requiring a permit and fee to do anything.
When it comes to taxes most people subscribe to the Willie Sutton theory. They want to tax the richest people and the most profitable businesses, because “that is where the money is.”
Over the years — as the various levels of federal, state and local politicians have added various taxes on special interests and loaded up the tax codes with loopholes and carve outs — the effect has been to grow government spending until it now exceeds 50 percent of GDP when you combine all levels of government and far more when you add in the cost of regulatory compliance. From the creation of the IRS forward incremental tax additions have allowed government to consume everything in its path.
Growth of U.S. spending as percent of GDP
Once again state’s unions reportedly are pressing for a business margins tax, probably similar to the 0.8 percent tax on business income floated in previous legislative sessions.
Once again others are floating higher taxes on gaming and mining, the fat cats and high profile targets in Nevada — suggesting increasing the 6.75 percent gaming tax to 9 percent and hiking the 5 percent mining tax to 9 percent.
Tweaking. Just tweaking.
If fundamental tax reform is needed, as so many claim year in and year out, then stop playing games and start all over.
All taxes are paid by people, not by businesses, which simply pass the costs along to either the customers in higher prices or their employees in lower wages. Stop the kabuki.
Create a sales tax with virtually no exceptions. The state taxation department could easily calculate the rate needed to cover the general fund, plus self-funded agencies such as transportation, which now is supported by fuel taxes. The tax would be on goods and services — haircuts to lawyers — with exceptions only for retail food and medicine to make it less regressive and blunt the whining.
If a person buys a car, he pays a sales tax. If a mining company buys a truck, it pays a sales tax. If a gaming company buys uniforms, it pays a sales tax. If it is purchased out of state, the tax is paid when it crosses the state line, whether purchased from a brick and mortar company or on the Internet. (OK, maybe that makes it more of a purchasing tax than a sales tax.)
There would be no tax on savings. There would be no tax on property. No gaming tax. No mining tax. No special tax on insurance premiums, just the sales tax. The more you spend, the more you pay.
If a family buys a house, they pay a sales tax. If a casino company buys a billion-dollar casino, it pays a sales tax.
This simplification of tax collection alone would save millions.
Now that is tax reform, but you’ll find no politician even willing to start the debate.
The only way this method works is to budget, make a “rainy day fund” that is ample for those years when spending is down. Our State falls into the woes of the “sales tax” cause they over spend each and every year. It is as if they “must” over spend…every day.
No, Dave, the problem is that they spend every dime they get, not what they need to spend. If the sales tax revenue falls, the spending must fall.
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And any windfalls are earmarked for future obligations (see Millennium Scholarship)
Or given back to the taxpayers, Athos. But saving for a rainy day is OK, too.
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Let me save for my own rainy day, with my own money, eh Tom?