Last year, Nevadans voted almost 4-to-1 against taxing businesses based on their gross receipts. Amidst an anemic economic recovery, most Nevadans understood that taxing them on their top line, with no regard for their costs or profitability, was a terrible idea.
But then the 2015 legislature, at Gov. Brian Sandoval’s last-minute behest and without reasonable opportunity for anyone to examine what he proposed, passed such a tax anyway.
Many Nevadans have expressed deep frustration at this disregard for the will of the voters. We listened. Then we acted by working to put his new “commerce tax” on the ballot for a vote by the people.
Recently, we defeated what we knew would be our biggest obstacle, a legal challenge seeking to prevent our referendum from being certified for signature gathering. The challenge was filed by the Governor’s allies after Ron filed the referendum in October for the RIP Commerce Tax organization. First District Court Judge James Wilson ruled definitively against every one of the specious arguments raised in the challenge.
Now we must collect more than 55,000 verified signatures to qualify the referendum for the ballot. With the level of enthusiasm behind the effort and frustration at the cost and filing burden of this tax, we’ll do it.
Along the way, we expect the campaign of misinformation and personal attacks against us to intensify, so let’s set the record straight now.
First, repealing the commerce tax will not unbalance the state budget, as our opponents would have you believe. Taxpayers will pay $75-million in commerce taxes in the second half of 2016, before they even get to vote. Repealing the tax next November will mean only that when the legislature meets in early 2017, it will have 1.6 percent less in general fund revenues available than it will have if the tax is retained.
Just as Nevada families and businesses have tightened their belts in recent years by a lot more than 1.6 percent, state spending will have to grow a bit slower than it has.
So repeal would not result in some Armageddon that will destroy our state, as the tax-and-spend crowd wants you to believe. The tax is not essential for funding state operations.
Second, the commerce tax is more pernicious than the margins tax proposal voters rejected last year. Although its rates are lower and some deductions are higher, the idea is the same. Even worse, though, is that the commerce tax will be charged at 26 different rates, depending on the state’s classification of each business. Differing rates were adopted so the political class can play divide-and-conquer in future legislative sessions and ratchet rates up and deductions down. Those industries that don’t “play ball” by hiring the right lobbyists and political insiders and contributing to the powerful politicians will be targeted. Businesses that pay the protection money will get protection.
If we don’t repeal the commerce tax, in 2017 insider politicians will increase many rates and decrease deductions to get more revenue. Gov. Sandoval wants to pump many millions more into higher education, and Nevada’s costs for his Medicaid program expansions will also increase. The tax eaters set the initial commerce tax rates low hoping that folks would not notice it and that it would give them a revenue mother lode to mine massively for a long time.
Do not underestimate tax proponents. Large gaming companies have long sought to push their tax burden onto other Nevada businesses via a gross receipts like this one, and they will spend big money to defend it. These special interests were, of course, exempted from the tax.
Twelve years ago, Brian Sandoval as attorney general sued the legislature to pave the way for a huge tax increase. His staff has said they will do whatever it takes to keep you from voting on this tax. So don’t be fooled by his charm, telegenic looks and smooth talk.
The commerce tax will be repealed if the people get to vote on it, and the referendum can help carry limited-government conservative Republicans to victory next year. As support continues to collapse for left-wing Democrats up and down the ticket, Republicans who vigorously stand up against this rightly unpopular tax will win big.
To get a petition to circulate, email RonKnecht@aol.com.
Ron Knecht is Nevada’s elected controller and Geoffrey Lawrence is assistant controller.