Nevada stands to benefit more than other states from the revamped federal tax code, according to a Las Vegas wealth manager.
Mike PeQueen, managing director and partner at HighTower Las Vegas, said the tax measure’s limits on deducting state and local taxes and mortgage interest would affect few in the state.
“Since Nevada does not have a state income tax, we are not losing the ability to deduct that, and because the cost of housing here is relatively moderate, we don’t have a lot of very high mortgages,” he said. “Unlike California, we’re not losing a lot of our deductions, so we’re probably one of the winners relative to other states.”
The biggest tax overhaul in decades passed Congress on Wednesday and is headed to President Donald Trump for his expected signature. The measure lowers tax rates for individuals and companies but scales back deductions for local taxes and mortgages above $750,000.
PeQueen also said the legislation’s lower tax rates for corporations might spur a bump in incorporations in Nevada as sole proprietors seek more favorable tax treatment.
“As people set up an LLC, it may make sense to set up a Nevada corporation,” he said.
He also said the changes in corporate taxes could impact large employers in Nevada.
“We also have some very large employers who do business overseas and those large corporations like MGM Grand or Wynn Resorts or Las Vegas Sands may benefit from having the ability to bring some of their money back from the jurisdictions like Macau and Singapore,” PeQueen explained.
The idea behind the tax breaks is to bring about repatriation of money that corporation has parked overseas in hopes they will use it for capital investment but critics of the bill say in reality the money will be used for share buybacks and to pay dividends to investors.
A major critique of the bill is those corporate benefits. Critics say it gives to many breaks to corporations and the wealthiest Americans. PeQueen agrees that it does do that, but supporters say that extra money in the pockets of the wealthy and corporations will trickle down into middle and lower income people.
Tim Wulf is a Reno businessman and a retired economics professor. He believes he, his workers and his customers will benefit from the tax overhaul.
“We’re going to benefit from the tax overhaul there is no question,” he told KNPR's State of Nevada, “Consumers are going to have more money to spend and that’s a win right away.”
Despite his approval of the bill, Wulf believes the overhaul should have done more to address technology to improve labor productivity.
“My real concern in the bill is that we’re not addressing labor productivity in the bill almost at all," he said, "And it is labor productivity that gives you long-term gross domestic product increases.”
He believes improving labor productivity, which he says has been stuck at 1 percent for the past 10 years, will address the wage stagnation that has dogged the economy for several years.
HighTower Las Vegas is a supporter of Nevada Public Radio.
Mike PeQueen, managing director and partner, HighTower Las Vegas; Tim Wulf, Reno businessman and retired economics professor