NPRI comments on Senate passage of Sandoval’s Gross-Receipts BLT

(Chantal Lovell of NPRI) – Las Vegas — Responding to the Nevada Senate’s passage today of Senate Bill 252 to create a Gross-Receipts Business License Tax, the Nevada Policy Research Institute’s Executive Vice President Victor Joecks issued the following comments:

The voters of Nevada made clear in November that they do not want to impose a gross-receipts business tax, yet today the Senate passed a similar tax. Unlike the 17 Senators who voted in favor of SB252, Nevada voters recognized that raising taxes on businesses that are struggling or even losing money will only hurt families and parents throughout Nevada.

Nevada voters should thank Senators Gustavson, Goicoechea, Hammond and Settelmeyer for respecting the will of voters and rejecting this destructive tax.

SB252 would create a tax that charges businesses on their gross receipts, meaning even businesses running a deficit would be required to pay. This will force struggling businesses to close their doors and lay off workers. As the Tax Foundation has said, ‘There is no sensible case for gross-receipts taxation.’

Joecks urged Nevada Assembly members to reject SB252 and noted that Texas has experienced numerous problems with its own tax on gross receipts, the margin tax.

Governor Sandoval has stated he’s modeled his tax after Texas’ franchise tax, but that tax is failing in Texas. After Texas implemented a margin tax in 2007, roughly 20 percent of small businesses reported they would be forced to lay off employees, while one-third of businesses reported they’d leave jobs unfilled. This gross-receipts tax has been so bad that lawmakers in Texas are currently looking to eliminate it.

Supporters of the Governor’s tax point to his popularity as reason to support this tax. But a poll released by NPRI on Monday shows that nearly 90 percent of Nevadans are unaware that Governor Sandoval has proposed the largest tax increase in the state’s history. In his last campaign Sandoval even touted his support for ‘no new taxes.’

Education does need reform, but that won’t come from throwing more money into the system through SB252. Lawmakers should implement innovative and proven solutions to Nevada’s problems, like universal Education Savings Accounts and paying top teachers in failing schools premium wages.

NPRI is a nonprofit, nonpartisan think tank that produces and shares ideas and information that empowers people. For more information, please visit www.NPRI.org.