Deduction Reduction is a Tax Increase

(Chuck Muth) – Nevada’s mining industry was expected to pay $55 million this biennium. A new proposal by Gov. Jim Gibbons to eliminate some business deductions currently allowed would almost double that amount. Yet the governor claims “That is not a tax increase if you look at it closely. It is merely clarifying the deductions.”

Yeah, and it all depends on what your definition of “is” is, right?

It’s….a….tax….increase.

Mary Lau, president and CEO of the Retail Association of Nevada, told the Nevada News Bureau that Gov. Gibbons’ mining tax proposal was “clearly a tax increase.”

It’s….a….tax….increase.

Carol Vilardo of the Nevada Taxpayers Association told the Nevada News Bureau that “the mining industry proposal is clearly a tax increase.”

It’s….a….tax….increase.

The operative word in both Lau’s and Vilardo’s opinions is “clearly.” It’s only the Gibbons administration which seems fuzzy on this.

“What citizen in this state gets to subtract deductions from their property taxes?” Gibbons asked in a statement released on Wednesday. “We are closing loopholes so the mining industry pays its fair share, just like all other major businesses in Nevada.”

Bull.

Those aren’t loopholes. Those are legitimate deductions afforded the industry by law just like your deduction for charitable contributions or mortgage interest on your federal tax return. To try to hide behind the fact that no one gets to take deductions from their property tax is disingenuous at best.

It’s….a….tax….increase.

“I do not view these proposals as tax increases,” Gibbons said.

It’s….a….tax….increase.

“What we are doing is closing those inadvertent loopholes,” according to Gibbons. “We are not raising any sort of tax increase on anybody.”

That’d be like saying the tax deduction for ink by newspaper is a “loophole.” If you eliminate the deduction for ink, you’d increase the tax burden on newspapers. If you eliminate the tax deduction “loophole” on restaurants for buying napkins and tablecloths, you’d increase the tax burden on restaurants.

“It’s not a loophole,” affirmed a representative of Americans for Tax Reform, sponsor of the Taxpayer Protection Pledge, who I spoke with on Wednesday. “It’s a tax increase.”

Where have I heard that before?

The governor also said, “If anyone else has any ideas on how to fix it (the budget deficit), I am listening.”

Here’s one: Why not set up two tiers of motorcycle licenses? Keep the law as is for those willing to wear helmets, but charge a premium fee for those who wish to ride without helmets. As the premium-priced license would be a true voluntary user fee, such a proposal would not violate the Tax Pledge.

In addition to the revenue raised by the new helmetless licenses, the tourism increase by the motorcycle rider community would be huge. That would boost room tax revenues, food tax revenues, gaming tax revenues and entertainment tax revenues….all without raising taxes.

Or you could legalize and tax marijuana like alcohol. Pot ain’t meth. And prohibition hasn’t worked. The drug war has been an expensive failure. How many prisoners are taxpayers housing at extremely high cost right now for lighting up a doobie?

Or move Nevada from the divorce capital of the world to one which promotes marriage: gay marriage. Can you even imagine how many gay couples would love to blow a wad of cash on a Vegas wedding?

So it’s not that there aren’t ways to dig out from under this budget problem without raising taxes; there are. But first you take tax hikes….and tax hikes disguised as deduction reductions….off the table.