Never let the facts get in the way of your ponderous pontification

There is simply no point in arguing with steel-trap logic.

Under the syllogistically undeniable headline, “Uncertainty is bad, but so is mediocrity,” Las Vegas Review-Journal left-listing columnist Steve Sebelius recounts a few quotes from Monday’s UNLV 2014 Economic Outlook in which experts warned that the potential passage in November of a margins tax on businesses is not good for the economy because it creates uncertainty.

But then he bulls his way forward with certitude and confidence, boldly saying the state’s public education system needs more money to improve the level of performance of high school graduates, which will be better for the economy than a tax that sucks the profit out of doing business in Nevada.

The Education Initiative proposes a 2 percent margins tax on all Nevada businesses that gross more than $1 million a year.

“Certainty may be good for business, but it’s not always a good thing. It’s almost certain that if we keep running our schools the way they’re being run now, we’ll continue to reap the disappointing results we’ve seen up until now,” Sebelius writes. “It’s almost certain that if we don’t provide future businesses with an educated workforce capable of performing in new, high-tech jobs, businesses that offer those jobs will continue to set up shop elsewhere.”

Who can argue with that? It sounds reasonable. It sounds logical. It makes sense.

It simply isn’t based on any factual evidence whatsoever.

This is what throwing ever more money at public education in this country has so far accomplished:

Cato Institute graphic.

Tried and true, right?

The only thing that has a chance of improving education outcomes in this country is competition and choice.

And don’t think for a minute that Nevada hasn’t already been pouring more and more money into its public education system:

NPRI graphic using National Center for Education Statistics at the U.S. Department of Education.

Also to no avail:

NPRI graphic, and, yes, it should read eighth grade.

Besides, there is no assurance any of the margins tax revenues would ever be spent on education.

But those are just pesky facts.

Margins tax might not add a dime to education funding

Money is fungible.

This fact appears to have escaped the backers of a margins tax on businesses that is supposed to raise money for K-12 education. The measure is on the November 2014 ballot.

The Nevada State Education Association teachers’ union estimates the tax would raise $800 million a year, a contention business leaders seriously doubt.

But furthermore, the ballot initiative contains no language that would prevent the Legislature from simply taking tax money that currently goes to education and spending it elsewhere — the very definition of fungible, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

“The only two things in the initiative that specify education is the title, which says ‘education first,’ and then the fact the initiative requires the money to be deposited in the DSA (Distributive School Account),” says Carole Vilardo, president of the Nevada Taxpayers Association. “There is no language in the initiative that says the money must go to education or that existing revenue that goes to education cannot be supplanted.”

Vilardo noted that a 3 percent tax on hotel rooms in Clark and Washoe counties was earmarked to improve student achievement and increase teacher salaries.

“The Legislature turned around and changed the use of the revenue. It went to the general fund the first year, and then it went into the DSA. It was to come out of the DSA for July 1st of 2011 (and go into a special education support fund). In the 2011 session it was delayed until July 1st of 2013. In the last session it was further deferred to July 1st of 2015.”

“This is what scares me about this upcoming election,” said Kelly Bullis, head of a Carson City certified public accounting firm. “I don’t think the average low-information voter is going to get this. The way this law is written, the money that is collected from this tax is put in the general fund that’s marked for education. What that means is that big pot that the Legislature basically has, this general fund, that they move stuff around. That’s what they vote on every two years. If you already have a lot of money in the education fund, then they don’t need to take money from something else to put in the education fund.”

The legislature could even decrease education funding and there is nothing in the margins tax initiative to stop it, Vilardo said.

Read the entire column at the Ely or Elko website.

Lieutenant governor race will be one to watch

Sue Lowden

Mark Hutchison

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This could get interesting.

A month ago Mark Hutchison, the governor’s hand-picked candidate for lieutenant governor, spoke to the Nevada Republican Men’s Club. On Monday his Republican primary opponent Sue Lowden — though there may be others yet to announce — spoke to the same group.

Shall we say, the two have some differences?

A month ago Hutchison explained that he voted for SB123 — which prematurely closes coal-fired power plants and orders NV Energy to build new plants that will use natural gas and renewables, such as wind and solar — after talking to members of the power company board of directors who supported the bill and have a fiduciary responsibility to operate the company properly. He indicated the Obama administration would have shut the coal plants soon anyway.

On Monday Lowden said she would have opposed the bill because it will increase electricity rates, while mentioning this country has 300 years worth of coal in the ground.

Lowden also announced strong support for legislation that would allow concealed weapons permit holders to carry those weapons on college and university campuses, noting that Hutchison declined to sign on as a sponsor to such a bill in this past session. But in hearings Hutchison did question why campuses should be off-limits for concealed carry any more than any other location and voted for the bill, which died in an Assembly committee.

The issue that may resonate most outside of Clark County is Hutchison’s joining five other Republicans to put forth a measure to raise taxes on the mining industry. A month ago Hutchison told the audience he did so simply to counter the margins tax being put on next November’s ballot by the Nevada State Education Association. He said that tax would destroy businesses and kill jobs, and his mining tax support was a tactical move to head off the far worse margins tax.

On the margins tax, both candidates agree it is dreadful. Lowden said it is already affecting jobs because companies will not move operations to Nevada in fear that margins tax might be approved by voters. But she slammed Hutchison’s mining tax proposal and promised to oppose all tax increases.

Newspaper column: How the margins tax on the 2014 ballot would harm businesses

Voters will be asked next November whether to impose a 2 percent margins tax on Nevada businesses that have gross revenues in excess of $1 million, a proposal put forward by the Nevada State Education Association as a means of funding K-12 education.

Business leaders will soon be starting a campaign warning voters about the harm this tax would do to businesses, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

“It will have a huge impact on our members that have revenue of a million dollars, which in a small business is not that large,” warns Bryan Wachter, director of public and government affairs for the Nevada Retailers Association. “They allow you to have a deduction for cost of goods sold, you can deduct compensation, or you can take a standard 30 percent deduction. They let you take that and then you apply the tax to that number. The problem with that is it completely ignores how a small business operates.”

Wachter said there is no deduction of anything else that goes to the bottom line of a business, such as rent and utility costs. Though a business incurs both compensation and cost of goods sold, it must choose one or the other to deduct and not both.

He said a small business that sells $1 million in goods might have a profit of only $60,000 a year. “When you have a tax that could potentially come in at $15,000 or $30,000, you’re putting a lot of businesses in a position where they have to choose to stay in business or not stay in business,” Wachter said.

The retailers are a part of the Committee to Protect Nevada Jobs, which also includes gaming, trucking, agriculture, banks, car dealers, restaurants, manufacturers and more.

Carole Vilardo, president of the Nevada Taxpayers Association, said businesses will treat the tax as just another expense of doing business.

“When I go to my accountant and calculate all my expenses, he comes back and says to me, ‘Your margin is not enough.’ I have a couple of things I can do. I can raise my prices, if the competition will let me, which means you, John Q. Public, is going to pay my taxes that I have to pay. Or I can freeze salaries. I can reduce hours of employees. I cannot hire for vacancies that I had. In the worst-case scenario I may have to let go an employee or two. …” she said.

Read the entire column at Ely or Elko website.

Newspaper column: How the margins tax would work

The November 2014 mid-term election is still a year away, but the campaigning over a key ballot question should be starting in earnest soon — as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

The Nevada State Education Association managed to gather enough signatures and survive enough court challenges to have its The Education Initiative go before the voters. The initiative proposes a 2 percent margins 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.

A coalition of businesses is coming together and expects to start its opposition campaign possibly before the first of the year. There is already a website that spells out reasons to vote against the tax.

Carole Vilardo, president of the Nevada Taxpayers Association, explained how the tax would be assessed.

Once a business exceeds $1 million in gross revenue, it must pay the tax, Vilardo said. Then the business may take one of three deductions: A. A straight 30 percent of revenues, leaving the tax due on 70 percent of revenue. B. The cost of goods sold. C. Employee compensation up to $300,000 per employee. Gaming taxes and the payroll tax are also deductible.

Kelly Bullis’ certified public accounting firm in Carson City has created an online spread that business owners may use to estimate what the margins tax would be for their companies. It may be downloaded from the Nevada Manufacturers Association website.

Read the entire column at the Ely or Elko site.