(Michael Chamberlain/Nevada Business Coalition) – Remember those “temporary” taxes passed back in 2009 that were supposed to “sunset” this year? You know, like the Modified Business Tax (MBT) that Senate Majority Leader Steven Horsford recently wrote “hurts small business and hampers job creation”? Those “temporary” taxes.
Seems they may not be going away so fast after all. Not if SB491 passes, which the Senate Revenue Committee began discussing today.
SB491 would extend the sunsets on the taxes scheduled to expire this year until 2013. It would also implement a Modified Gross Receipts Tax. Oops, I mean a Margin Tax.
In his testimony in favor of the bill, former Harrah’s executive Phil Satre claimed extending the sunsets wouldn’t hamper job creation. Either his statement contradicts both Horsford’s op-ed on Sunday and testimony today or there is some version of the Modified Mayan Calendar they are using that indicates the MBT will only hurt job creation some time after 2014 or so.
For his part, Horsford testified that the MBT does hurt job growth but the extension of the sunsets is necessary as a “bridge” until other tax reforms come on line. Just as we were promised that those tax increases would go away this year, now they’re promising they’ll disappear in 2013. Forget what they said last time; this time they really, really, REALLY mean it.
The Margin Tax is eerily similar to the Gross Receipts Tax that even the tax-hungry 2003 Legislature rejected. Despite these similarities and the fact that the Legislative Counsel Bureau’s Senior Deputy Fiscal Analyst Russell Guindon described the Gross Receipts Tax as “the starting point” for the Margin Tax, Margin Tax proponents would like you to believe that it’s completely different from the Gross Receipts Tax. For our part, such similarities and origins have earned the Margin Tax the moniker as the Modified Gross Receipts Tax (MGT).
The MGT would impose a tax on every business with revenues over $1 million. Just as the temporary tax increases are ending as scheduled and just as the federal income tax has never applied to those making less than the $1 million as originally designed, this threshold will never be lowered.
Guindon issued a number of non-definitive answers to questions, indicating that no one really knows exactly what the MGT is going to do.
Although some of the proponents spoke of reducing other taxes if revenues from the MGT exceeded expectations, who really thinks that’s going to happen? Horsford proposed that at least a portion of any excess revenues collected be used for reducing unfunded PERS liabilities.
While it was refreshing to see Horsford admit PERS does have an unfunded liability, his solution appears to be to increase the burden on taxpayers rather than reform the system.
The taxes scheduled to sunset this year will for sure end in 2013, the MGT is nothing like the Gross Receipts Tax, if revenues come in higher than expected other taxes will be reduced and spending not increased and the MGT will never apply to businesses with revenues below $1 million. And if you believe all that, there’s this bridge…
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)