Craig Mueller, the attorney for a group seeking to repeal the 2015 commerce tax calling themselves RIP Commerce Tax, argued before the state Supreme Court today that the group should be allowed to collect signatures and have the repeal placed before the voters in November.
Nevada Controller Ron Knecht is heading up the repeal effort.
Though it is hardly a legal argument, as one justice told him, Mueller spelled out a strong political argument against the commerce tax:
When the federal government first proposed an income tax in 19 aught 6 or so, I don’t remember the exact year, it was supposed to be on millionaires, on the edge of the Golden Age. A hundred years later, everyone pays income tax.
Now, the two things I’ve noticed about government, it never gets any smaller, taxes never go down.
Now I hate to be cynical about these things, but those are a simply statement of facts. My clients are very concerned about that trend and very concerned they don’t have their say on this tax.
Just moving the dial forward another 10 or 12 years, this tax goes down 4 million dollars to 3 million to 2 million and it starts to looking an awful lot like a state income tax.
Mueller also noted that the voters turned down a gross receipts tax — identical to the commerce tax in principle if not in specifics — in November 2014 by a margin of 4-to-1. The Legislature passed the commerce tax with the required two-thirds majority and the governor signed it.
The Coalition for Nevada’s Future argued the petition should not be allowed to go forward because its language is confusing and its form does not conform strictly with legal requirements. They also argue repeal would unbalance the state budget. The state Constitution requires a balanced budget.
Mueller noted the tax is expected to raise only $60 million a year as currently written and the interim finance committee has handed much bigger shortfalls in the past due to economic slumps.
The commerce tax would impose a gross receipts tax on all businesses grossing more than $4 million a year. It has different tax tables 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 or lowering the threshold.
One of the complications of the ballot measure is that if the voters allow the tax to stand as written, some argue the Legislature would not be able to alter it in any way without a vote of the people. If the people repeal, lawmakers could not impose a similar tax without a vote of the people.
Carson City Judge James Wilson earlier 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.”
The justices should rule fairly soon because the group has a deadline of June 21 to collect enough signatures.