Don’t Tax Me, Bro!

(Michael Chamberlain/Nevada Business Coalition) – Yesterday, the Las Vegas Sun’s David McGrath Schwartz revealed the gaming and mining industries have been involved in secret talks with local labor unions on a possible ballot initiative that would raise taxes.

Another instance of Big Business and Big Labor conspiring to stick it to the little guy.

Since these groups were unable to get what they wanted in the last legislature, which was an increased burden on everyone else in the state, they, according to Schwartz, “declared Nevada’s legislative system broken.” Thus they are going to try to fix what they see as the problem by taking it to the voters.

This approach is precisely what brought us the state’s minimum wage law. That piece of job-destroying legislation that has worked out so well for the state’s economy and is one reason Nevada now leads the nation in unemployment. Interestingly enough, that initiative was spearheaded by the unions but it exempts those same unions from many of its provisions. How convenient.

The proponents of these tax increases complain about the lack of revenue for the state government to spend. Their solution is to attack a symptom, not cure the disease. In fact, their prescription would make the disease even worse.

They overlook the reality that this reduction in tax collections is a direct result of the decline in private sector business activity. Even as the economy has begun a sluggish recovery tax revenues have been increasing. A quicker rebound would create much greater revenues.

Rather than work to ease the burden of regulations, restrictions and red tape that would promote private-sector economic growth and re-fill government coffers, they advocate for policies that will make it more difficult for the state’s businesses, smothering any recovery before it gains momentum.

Reform of the tax system in Nevada is a noble goal and there are ideas out there that deserve to be looked into. But this group appears to be in favor of reviving a bad idea that will only make Nevada’s main problems – a weak economy and volatile revenues – even worse.

The most likely proposal would be a modified gross-receipts tax such as the one proposed in the last Legislature. This tax applies to business regardless of whether they are profitable.

There are a host of problems with this type of levy, not the least of which is that it would increase the volatility of the state’s tax collections – generating an even wider swing from the peak to the trough of business cycles. This will cause the government to overspend even more in good times, creating even greater shortfalls during downturns. In other words, it would make one of the problems the Big Biz/Big Labor Coalition claims to want to address even worse, not better.

What it really comes down to is more – more money for government. Big Labor wants more money for government to spend on its members – higher pay and benefits for members of government unions and more money for city and county governments to dole out on public works projects in which the playing field is tilted in favor of union companies.

The members of the Big Business side have for years advocated for raising taxes on industries other than their own. They’ve proven perfectly willing to support higher taxes on other businesses.

Once again the state’s Big interests – Big Business and Big Labor – are joining forces to burden the state’s small- and medium-sized businesses. They’ve come up with yet another proposal that will put an unnecessary drag on the state’s other businesses.

(Michael Chamberlain is Executive Director of Nevada Business Coalition.)