The 77th Nevada Legislature began its latest 120-day biennial session on February 4, 2013. It faces enormous pressure to tackle a broad array of issues during the four months it will convene in Carson City. Of particularly interest to businesses in Nevada will be whether the legislature finally moves to modify Nevada's system of taxation. Will Nevada broaden its tax base, and how might such broadening impact businesses? Or will legislators take a cue from their Federal counterparts and engage in more brinksmanship and bickering without accomplishing anything?
Nevada, like many of her sister states, has an anti-tax
backdrop. The Nevada Constitution prohibits personal income taxes and inheritance tax, caps the tax rate on mining, and prohibits lotteries. The state's
traditional sources of tax revenue — sales tax on goods,
gaming tax, and property taxes — are either declining or flat
sources of income. Many believe that the state's lagging
education system — both at the grade school and college
levels – inhibits the state's ability to import
businesses and talent.
There is reason to believe that the Legislature's new
leadership will be better able to generate bipartisan compromises
than in the past. Still, Nevada Governor Brian Sandoval has
consistently vowed to veto any tax increases, as the Las Vegas
Review Journal has reported. Attempts to tax margins, to
expand the sales tax to cover services in addition to goods, and
other method of filling the state's coffers to fund education
and other needs will be explored and discussed at length, but there
is little to suggest that any new law can be passed given the
Governor's position and the Democrats' slim 11-10 member
margin in the Senate, which effectively prevents it from overriding
a veto.
Decades of studies and legislatures have produced much talk
about reforming the state's tax system, with little or no
tangible results. The 2002 Governor's Task Force Report, for
example, resulted in a laundry list of proposals to reform the tax
system. Not one of the Task Force's proposals became law.
Although the 2013 Legislature's leaders talk about
reconciliation and eliminating partisanship, it is hard to imagine
any major overhaul of the tax system in 2013, let alone one that
will result in substantial additional funding to the state's
ailing education system. Maybe we will all be surprised.
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