(Victor Joecks/NPRI) – Is it bad that I’m already sick of hearing this distortion — that Nevada is a low-tax state — and the session hasn’t even started?
The corollary to the low-tax distortion is that Nevada has a relatively small government. For instance, on “Face to Face” last week, Assemblywoman Peggy Pierce, while pushing a corporate income tax, said:
Nevada has, by a very, very large margin, the smallest government in the country.
We have the most conservative government in the country here in Nevada.
Both of these statements — Nevada is a low-tax state and Nevada has a relatively small government — are true in one sense, but false when you look at the complete picture.
Here’s the whole truth: Nevada is a very decentralized state, with the Silver State’s local governments providing a comparatively greater amount of government services than in other states. Nevada is also a Dillon’s rule state, meaning state lawmakers have ultimate authority over local revenues.
Consequently, taxes in Nevada that go to state government are lower than in other states, but local governments in Nevada spend comparatively more in taxes (over which Nevada state government has authority) than in other states. And since Nevada’s government is intentionally decentralized, state government is relatively modest, while local governments are more robust.
Overall, Nevada is ranked in the top half of states when it comes to combined state and local tax collections.
The Tax Foundation ranks Nevada 25th in terms of state and local tax collections.
The Brookings Institution ranks Nevada 24th in terms of state and local tax collections.
The Tax Foundation and the Brookings Institution may not agree on much, but they both agree that Nevada ranks in the top half of states in terms of state and local tax collections.
Since Nevada ranks in the top half of states in terms of state and local tax collections, Nevada, despite the conventional wisdom, isn’t a low-tax state.