Will they be able to do it? That’s the question.
Are a bi-partisan group of lawmakers, Governor Brian Sandoval and some business leaders, ready to push for reforms to the state’s tax structure without upsetting people in the business community and the political far right?
Only time will tell. But as lawmakers prepare to convene in Carson City in February, the Las Vegas Metro Chamber of Commerce, an organization historically opposed to tax increases, is betting all sides will be able to reach an agreement.
The chamber’s vice president of government affairs, Paul Moradkhan, said that after Question 3, known by opponents as the Margins Tax and by supporters as the Education Initiative, failed in the November election the chamber agreed to have a discussion about tax reform in the state.
To support the legislative process, the business group commissioned a Tax Foundation study of potential tax reforms, including reforms to sales and property taxes. Suggestions include an update to the state’s sales tax system from taxing consumers on the goods they buy to taxing the services they use on a daily basis.
Liz Malm an economist with the Tax Foundation said the services tax is part of a menu of ideas the report offers to lawmakers.
She explained why the foundation believes it is better than another sales tax:
“Services tax broadens the base thereby lowering the tax rate on everybody,” Malm said.
However, those opposed to the tax says it is regressive, meaning it impacts lower income people more heavily than higher income.
State director of Progressive Leadership Alliance of Nevada Bob Fulkerson said the state really needs to consider a business tax. He says the state has a sales tax and taxes on gaming but it really needs another straw, which is a business tax.
The Tax Foundation report also urges eliminating the live entertainment tax and applying a sales tax on shows on the Strip and elsewhere in the state. The foundation also endorsed the idea of changing the modified business tax, otherwise known as the MBT or payroll tax.
Business that have a payroll of more than $85,000 a month are subject to the tax. The foundation suggested repealing the $85,000 threshold, evening the rates that banks pay and ending the branch bank exemption. Currently, banks pay a 2 percent rate, while other businesses pay 1.17 percent. Branch banks pay nothing.
The president of the Nevada Taxpayers Association Carole Vilardo says she agrees with the ideas in the report, but says the state must fix current problems.
“Before you look at new taxes, you got to have a current system that works and ours doesn’t,” Vilardo said.
Paul Moradkhan, vice president of government affairs, Las Vegas Metro Chamber of Commerce
Carole Vilardo, president, Nevada Taxpayers Association
Bob Fulkerson, state director, Progressive Leadership Alliance of Nevada
Liz Malm, economist, Tax Foundation
Steve Sebelius, columnist, Las Vegas Review-Journal
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