Some are quibbling over the means of conveying an opinion in print

The advertisement

A newspaper is a newspaper. Newsprint is newsprint. An opinion is an opinion.

But apparently some people are aghast that a newspaper would use its newsprint to convey opposition to ballot Question 3 in both an editorial and a series of in-house advertisements.

Online journalism critic Jim Romenesko noted in his blog that the Las Vegas Review-Journal is running so-called house ads that opposed the margin tax or The Education Initiative. He quotes a defrocked newspaper columnist as saying, “I’m sure this will be disclosed in all news stories from now on, right?”

Just as all news stories will disclose that the paper editorially opposed the ballot measure in a Sept. 28 editorial, though its political columnist endorsed the measure a couple of days later? That would take a lot of explaining. The disclaimer about the editorial, the column and the ad would be longer than any story.

The local pundit has since asked whether the newspaper will register with the Secretary of State as a political action committee and disclose expenditures because state law defines a “Committee for political action” as a group “Which does not have as its primary purpose affecting the outcome of any primary election, general election, special election or any question on the ballot, but for the purpose of affecting the outcome of any election or question on the ballot receives contributions in excess of $5,000 in a calendar year or makes expenditures in excess of $5,000 in a calendar year.”

What difference does it make in what form the opinion appears? It takes the same amount of newsprint, which is going out the door and onto the driveway anyway. What cost?

But there is a section of the law that reads:

NRS 294A.370  Media to make certain information available.

      1.  A newspaper, radio broadcasting station, outdoor advertising company, television broadcasting station, direct mail advertising company, printer or other person or group of persons which accepts, broadcasts, disseminates, prints or publishes:

      (a) Advertising for or against any candidate or a group of such candidates;

      (b) Political advertising for any person other than a candidate; or

      (c) Advertising for the passage or defeat of a question or group of questions on the ballot, shall, during the period beginning at least 10 days before each primary election or general election and ending at least 30 days after the election, make available for inspection information setting forth the cost of all such advertisements accepted and broadcast, disseminated or published. The person or entity shall make the information available at any reasonable time and not later than 3 days after it has received a request for such information.

      2.  For purposes of this section, the necessary cost information is made available if a copy of each bill, receipt or other evidence of payment made out for any such advertising is kept in a record or file, separate from the other business records of the enterprise and arranged alphabetically by name of the candidate or the person or group which requested the advertisement, at the principal place of business of the enterprise.

But I doubt the newspaper will bill itself for those house ads.

Never mind that much of the law is clearly an abridging of free speech and press anyway.

That hasn’t stopped the current Secretary of State Ross Miller from pursuing legal action against people for expressing their opinions in public.

 By the way, the URL in the ad VoteNoQ3.com is a link the paper’s editorial on the topic.

The editorial

 

 

 

 

Newspaper column: Arguments against margin tax keep piling up

Every time someone kicks over another margin tax rock, a monster comes crawling out.

We’ve already learned from previous studies and analyses that The Education Initiative, or margin tax, on the November General Election ballot might not raise as much revenue for education as promised by backers, that the money raised by the tax could be diverted from education to other uses as lawmakers have done in the past, that it 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 everyone.

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. Some deductions for expenses are allowed. The union has estimated the tax would bring in $800 million a year in additional funding for K-12 education. It will be Question 3 on the ballot, as noted in this week’s newspaper column, available online at The Ely Times, the Elko Daily Free Press and the Mesquite Local News.

The Coalition to Defeat the Margin Tax Initiative — which is made up of retailers, miners, manufacturers and assorted businesses and business groups — recently published another study of the tax’s effects on Nevadans.

This latest study was conducted by Nevada economist John Restrepo and his RCG Economics firm in collaboration with UNLV economist Alan Schlottmann and others.

Restrepo focused on the impact the tax would have on those who own several businesses, because the tax would treat an owner’s various entities as one for tax purposes.

“For example, one person may own a car wash business and a retail store with annual revenues of $450,000 and $600,000, respectively,” the report explains. “Each company is considered an independent business establishment, but because they share a common owner, these companies would be combined into an affiliated group for the purposes of the Initiative” and thus exceed the $1 million threshold.

When those shared-owners are calculated, 16,288 large and small Nevada businesses would be affected by the tax.

Dan Hart, a spokesman for The Education Initiative, has dismissed businesses qualms about the harms of the tax by saying that 87 percent of Nevada businesses wouldn’t be subject to the margin tax, because their gross receipts are less than $1 million.

He fails to mention that nearly 80 percent of Nevada’s small businesses have no employees whatsoever, while those that would be subject to the tax employ a majority of private-sector workers in Nevada.

This latest study in fact estimates the tax will affect the employers of 608,000 workers, representing 63 percent of private jobs in 2013. “On a per employee basis, the margin tax would be an equivalent of  $1,314 per year,” the report concludes.

RCG Economics graphic

The study also breaks down the effective tax rate by type of business. When the margin tax is combined with the current modified business tax, the study found a residential home builder would pay a tax rate of 4.7 percent, while a patient care facility would pay 13.8 percent, a construction wholesaler 42.5 percent, some real estate brokers 86.4 percent and family owned restaurants would be taxed in excess of 100 percent.

In light of figures like these, even the Culinary union has come out against the margin tax.

 

Those are merely the current knowns that can be calculated. The report points out that future bottom line impact is incalculable.

“Unless the long-term impacts of the proposed margin tax to the Nevada economy and its residents are clearly understood, a full analysis of the economic and business ramifications of the tax on the state’s economy is not possible,” the Restrepo report concludes. “The proposed margin tax must be measured and evaluated on its impact to Nevada’s economic growth potential, the state’s economic development efforts, and last but not least, on future business investment. Anything short of this lays the groundwork for a potentially bad public policy that would negatively affect the state’s economic future and the lives of its residents.”

The Nevada Taxpayers Association has warned that many businesses are already struggling to survive the recession and “this tax may prove to be the proverbial straw that breaks the camel’s back.”

Anti-tax coalition spokesman Karen Griffin says that “many businesses that sell goods and services in Nevada would pass on their increased costs from the tax to consumers, increasing the costs we pay for food, clothing, health care, electricity, phone bills, and other products and services.”

There is no guarantee that increased spending on education would improve education. In the past 40 years, Nevada has increased inflation-adjusted education spending 100 percent, while SAT scores have fallen.

Margin tax passage could cost thousands of Nevadans their jobs

Information on the deleterious affects of the proposed 2 percent margin tax on November’s ballot keep trickling out.

Atop 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 jobs.

The analysis by economist Jeremy Aguero of Applied Analysis, a Las Vegas-based fiscal and policy research firm, for the Coalition to Defeat the Margin Tax Initiative, concluded that sucking $700 million in taxes from the private sector would translate into about 5,800 private jobs lost directly as a result and a total of nearly 9,000 private jobs when the indirect and induced factors are added in. This would cut the state’s private payroll by more than $400 million a year.

The Education Initiative would raise taxes, supposedly for education.

 

Of course, 9,000 jobs lost would be hardly a ripple, since Nevada already has 120,000 unemployed, not counting those who have given up looking for work. But if it is your job lost, it would be pretty significant to you.

The Education Initiative will be Question No. 3 on the November statewide ballot. It calls for a 2 percent margin tax on all Nevada businesses that gross more than $1 million a year. Its sponsor, the Nevada State Education Association, has claimed it would raise $800 million a year for K-12 education. Proceeds from the tax would be placed in the distributive school account, but there is no language in the ballot measure prohibiting lawmakers from extracting a like amount or more and spending it on other things.

Aguero did note in his study that the loss of private jobs could be offset by public jobs if the tax money is used to hire additional teachers and staff.

The reports says “there are plausible scenarios where margin tax funds are not used to hire more teachers, but rather, are used to increase wages and salaries for existing teachers, administrators and support staff; to extend retirement or health care benefits to state workers; or to pay down the state’s unfunded pension and post-retirement health care liabilities. Similarly, there is also the possibility that upon passage of the Initiative that the Nevada State Legislature will allow one or more of temporary state taxes to sunset, including without limitation, the 0.35 percent Local School Support Tax currently deposited into the distributive school account.”

Also, in addition to killing current jobs, Aguero said the tax would chill economic growth and prevent the creation of future jobs:

“While net job losses may be somewhat modest, new job formation would potentially be far more significantly affected. Economic development and diversification have clearly played a critical role in Nevada’s economic recovery and are considered essential to the state’s long-term economic viability. While evaluating the impact on new investment and business relocation in beyond the scope of this preliminary analysis, it should not be ignored. Neither should the reality that even under the best possible outcome — whereby the tax increase does actually lead to substantial improvements in educational attainment — there will be a transitional period in which Nevada has both a higher-than-average business tax rate and a low performing public school system. It is hard to imagine a climate less conducive to economic growth.”

Though the Las Vegas Review-Journal had a story today on the margin tax, it failed to mention the jobs study. The Las Vegas Sun has a brief story, but only online and not in print.

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.

Newspaper column: Margins tax may come up short on revenues

When the Nevada State Education Association teachers’ union placed a 2 percent margins tax on businesses on the November 2014 ballot, the union estimated the tax would bring in $800 million a year in additional funding for K-12 education.

Business community leaders say that number is a pipe dream, as reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

“In this law they are saying you get to deduct your direct cost against this income to compute the tax. And it gives you a couple of alternative ways of computing it. If you don’t want to go through the trouble to figure out what your direct cost is, you can elect to use a default of 30 percent,” says Kelly Bullis, who operates a certified public accounting firm in Carson City. “Now for most businesses I know that is really low. That by the way is where I think the teachers made their assumption about how much money they’re going to make. They think everybody has less direct cost than 30 percent, so they’re all going to choose the 30 percent by default. Reality is: I think you’ll see in most businesses their direct cost is 50, 60, 70 percent of their gross income.”

Bullis said the union and its advisers simply don’t understand business. He gave an example of a gasoline station. If gasoline costs $4 a gallon, the direct cost to the station owner is probably $3.95. A service station might sell $3 million in gasoline but would be able to deduct most of that as direct cost of goods sold.

Ray Bacon, executive director of the Nevada Manufacturers Association, recalls that when an NSEA expert testified before a legislative committee that the tax would generate about $800 million a year, Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said accountants had told her the tax would not generate so much money and asked the expert to show her their calculations as to how they arrived at that number.

“The last time I knew, she still had not seen them,” Bacon said, “which means they don’t have a clue. It’s a wild ass guess.”

A coalition of business associations will be raising money to put on an education campaign. That should start by the end of November.

Read the entire column at Ely or Elko website.

Apparently when questioned on Nevada NewsMakers by Sam Shad, even Ruben Murillo, president of the Nevada State Education Association, doesn’t know how much the margins tax will bring in.

 

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.