Newspaper column: Margin tax would greatly increase tax burden

The battle for votes over Question 3 on this November’s statewide ballot — known as The Education Initiative by its proponents, but as the Margin Tax Initiative by its opponents — is escalating.

The Nevada State Education Association managed to gather enough signatures and survive enough court challenges to put before the voters a 2 percent margin tax on all Nevada businesses that gross more than $1 million a year. The union has estimated the tax would bring in $800 million a year in additional funding for K-12 education.

The Coalition to Defeat the Margin Tax Initiative — which is made up of retailers, miners, manufacturers and assorted businesses and business groups — has published a report by noted numbers cruncher Jeremy Aguero of Applied Analysis showing that, if this tax is approved by the voters, Nevada would jump from a state with one of the lowest business tax burdens in the nation into the top five, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

When added to the current Modified Business Tax, which is a 1 percent tax on businesses’ payrolls, the 2 percent tax on gross receipts, because of limited deductions for expenses, would give Nevada an effective corporate income tax rate on profits of 15 percent — the highest in the West and nearly double California’s business tax rate of 8.8 percent.

At a recent program put on by the Nevada Taxpayers Association to explain the margin tax ballot initiative, the association’s chairman of the board David Turner, also a CPA, said of the tax, “It’s very convoluted to start. The initiative itself is 31 pages. … Nobody can read the thing and understand what’s really going to be.”

Dan Hart, a spokesman for The Education Initiative, likes to point out that 87 percent of Nevada businesses wouldn’t be subject to the margins tax, because their gross receipts are less than $1 million. What he fails to mention is that nearly 80 percent of Nevada’s small businesses have no employees whatsoever.

Those companies subject to the tax, however, as Aguero points out, “employ the majority of Nevada’s workers and … account for the majority of the state’s economic activity …”

Aguero also found that the tax would cost Nevada consumers $60 million a year in higher premiums for insurance on automobiles, homes, life and health.

Read the entire column at Ely or Elko.

Applied Analytics chart showing impact of tax on various businesses.

Applied Analysis chart showing impact of tax on various businesses.

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12 comments on “Newspaper column: Margin tax would greatly increase tax burden

  1. Milty says:

    “The union has estimated the tax would bring in $800 million a year in additional funding for K-12 education.”

    The union’s claim is a bit deceiving. The tax may bring in an additional $800M/year, but even union officials acknowledge that there’s nothing that requires that this money be spent on education.

  2. Athos says:

    What is it with these people? Instead of “Land of the Free”, we are now “Land of the Entitled”.

    I’m beginning to think ONLY a national revival will restore our country.

  3. What’s up everybody, here every one is saring these familiarity, thereforre it’s goodd tto read this web site, and I used to pay a
    quick visit tnis web site all the time.

  4. Steve says:

    Ahh spammy the spam spam is trying to sell hookahs on this blog…lots “o” luck to spammy the spam spam.

    Success in blogging is measured in spam.

  5. Athos says:

    Hookah is legal in Nye county, right?

  6. […] Margin tax would greatly increase tax burden Mar14 by Thomas Mitchell The battle for votes over Question 3 on this November’s statewide ballot — known as The Education Initiative by its proponents, but as the Margin Tax Initiative by its opponents — is escalating. […]

  7. […] a previous report on how the tax would make Nevada’s effective corporation tax rate nearly double California’s comes a study that says the tax could cost the state nearly 9,000 private sector […]

  8. […] year — supposedly would fund education. The tax would give Nevada an effective corporate income tax rate on profits of 15 percent — the highest in the West and nearly double California’s business tax rate of 8.8 […]

  9. […] could destroy as many as 3,600 private-sector jobs, would increase Nevada’s effective corporate income tax to 15 percent (nearly double California’s 8.8 percent rate) and inflate consumer prices for […]

  10. […] could destroy as many as 3,600 private-sector jobs, would increase Nevada’s effective corporate income tax to 15 percent (nearly double California’s 8.8 percent rate) and inflate consumer prices for […]

  11. […] could destroy as many as 3,600 private-sector jobs, would increase Nevada’s effective corporate income tax to 15 percent (nearly double California’s 8.8 percent rate) and inflate consumer prices for […]

  12. […] could destroy as many as 3,600 private-sector jobs, would increase Nevada’s effective corporate income tax to 15 percent (nearly double California’s 8.8 percent rate) and inflate consumer prices for […]

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