In 2014 the voters of Nevada rejected by a 4-to-1 margin a tax on company revenues being pushed by the state teachers’ union.
Instead, the 2015 Legislature adopted a smaller version of the same job killing business margin tax — this time dubbed a commerce tax — despite the myriad arguments against it.
Whether the voters will get a chance again this November to reject this business tax now lies in the hands of the Nevada Supreme Court.
A group headed by Nevada Controller Ron Knecht plans to circulate a petition to place a referendum before the voters to repeal the commerce tax, which is estimated to raise $60 million a year as part of Gov. Brian Sandoval’s $1.5 billion package of new and higher taxes for the biennium.
In November District Judge James Wilson of Carson City rejected a constitutional challenge to the petition by a group calling itself the Coalition for Nevada’s Future, but this past week the group filed an appeal with the state’s high court. Nevada Assistant State Controller Geoffrey Lawrence and Controller Ron Knecht present an alternative to Gov. Brian Sandoval‘s tax plan in May. (R-J photo)
Judge Wilson had ruled, “The court concludes even if the Legislature enacts a statute, the people do not lose their constitutional right to submit the statute to a vote of the people.”
A separate effort to repeal the entire $1.5 billion tax hike was rejected by another judge but appeals continue and refiling of the petition is possible.
Backers of the commerce tax repeal must gather 55,000 signatures by June 21 to qualify for the November ballot.
While the commerce tax does not currently tax businesses nearly as aggressively as the teachers’ union version, it has the potential to grow over time and promises to be costly for businesses to be able to comply. As written, it has different tax rates for 27 different industries — ranging from a low of 0.056 percent for mining to a high of 0.362 percent for rail transportation in 67 different levels of revenue. And there is nothing to prevent future legislatures from ratcheting up those rates.
The tax rates on gross receipts vary because the profit margins in different industries vary greatly, but the law’s tax tables ignore the fact that profit can vary within an industry, too.
Gov. Sandoval has promised to fight the repeal efforts, calling such petitions “a wrongheaded attack on the children and families of Nevada. Supported by more than seventy percent of legislators, the revenue the petition seeks to eliminate will go directly to the classroom and give teachers the resources to deliver a quality education.”
Do 70 percent of lawmakers trump 80 percent of voters? We think not. The arguments against the so-called margin tax still apply to the commerce tax and are compelling.
The margin tax got on the 2014 ballot through the referendum process. The referendum process should be allowed to give voters a chance to repeal this tax that was already rejected once.
The Nevada Supreme Court should expedite this commerce tax case to give petitioners time to gather the necessary signatures by the mid-summer deadline.
A version of this editorial appears this past week in the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel, Sparks Tribune and the Lincoln County Record.