(Jim Clark) – Gov. Scott Walker chalked up a big victory last week as Wisconsin voters rejected a union-sponsored effort to recall him from office. The unions engineered the recall because Walker and his fellow Republicans enacted legislation ending collective bargaining by public employee unions (with the exception of police and firemen). The same day, voters in San Diego and San Jose overwhelmingly passed propositions to limit retirement and fringe benefits of city employees.
However, going against the national tide, in Nevada an amalgamation of public employee labor groups led by Nevada’s teacher union filed an initiative petition with the Secretary of State seeking to impose a 2% tax on business receipts. The proponents estimate the measure would raise $800 million in proceeds all earmarked for K-12 education (of which 85% to 90% goes for salaries and benefits).
In general, new taxes have the effect or curtailing and even killing an activity. Look at cigarettes. So, the first question should be whether we should be taxing business when Nevada unemployment is nearly 12%. The next question is whether a tax on gross business receipts is ever appropriate. Grocery stores and banks, for example, have substantial gross receipts, but modest profit margins as contrasted with mining, in which sales of minerals are substantially all profit once extracted from the ground. This raises the specter of some businesses having to pay taxes when they are losing money
The teacher union proposal tries to get around that by calling it a “business margins tax.” The levy would apply to all businesses with gross revenues exceeding $1 million and would be applied, at the taxpayer’s option, to 30% of its gross receipts, or its total revenue less compensation costs, or to total receipts less cost of goods sold. That nuance just muddies the waters, because businesses could still be losing money and owe taxes under this proposal.
But the most glaring problem with this proposal has nothing to do with what they propose to tax or how. Last month, was my 20th anniversary of being a Nevada citizen. I emigrated from California where my wife taught school. She will tell anyone who will listen that when promoters wanted to install a lottery in California, they told voters that all net profits would go to education. When the lottery was approved, the legislature cut way back on education funding because “education was funded by the lottery.” That (and not Proposition 13) was the beginning of California’s downward slide in education achievement.
Assume that the teacher union proposal passes. If the legislature and state house are in Democratic hands, then they will likely redirect at least $800 million of the education budget to building homes for unwed fathers or some other perceived social need. If the GOP is in control, they will lower taxes.
So why is the teacher union proposing this lose-lose proposition? Perhaps they should take a look at what’s going on in the American Federation of State, County and Municipal Employees union, which just spent a fortune in an unsuccessful attempt to recall Gov. Walker in Wisconsin. Their 77-year-old president is stepping down after 31 years at the helm and would-be successors are asking tough questions about why the union is spending huge sums of money as directed by the Democratic Party. Their membership has shrunk by 10% since 2009, so they are taking a good, hard look at their future.
Maybe Nevada teacher union members should also take a look at how their leadership spends members’ dues.
(Jim Clark is President of Republican Advocates, and has served on the Washoe County and Nevada state GOP Central Committees. He can be reached at firstname.lastname@example.org)