“…as they say,” Gov. Steve Sisolak said in his State of the State address last month, “if it ain’t broke, don’t fix it. That’s why this budget is presented without any new taxes.”
Sisolak and Democrats, having won All The Things in November, do not want people to think they are leftist reformers, wild-eyed tax-and-spend liberals, or Alexandria Ocasio-Cortez. In control of the governor’s office and both houses of the Legislature, the last thing Democrats want is to unsettle voters (and campaign contributors) by looking reckless and irresponsible. And evidently they are confident that the surest way to look reckless and irresponsible would be by raising somebody’s taxes.
The cliché Sisolak deployed to underscore the point, however — “if it ain’t broke, don’t fix it” –was inappropriate. There is a lot in Nevada that could be fairly described as broke, including a substantial portion of the state’s working population.
Make no mistake: Barring unforeseen and truly momentous circumstances that can’t be ignored (for instance, some big famous operation that likes Nevada so much it will move something here and all the state has to do is give it hundreds of millions of dollars of public subsidies), Sisolak is absolutely, positively not going to raise taxes during this legislative session, and probably not in the 2021 session either. Nevada 21st century governors prefer to wait for their second terms, if they get one, to raise taxes. (Pearl-clutching Republicans and their media friends are complaining that extending a tax scheduled to expire is the same thing as a new tax and Democrats are going to do that so jeepers Democrats are horrible, or words to that effect. Perhaps you’ll be kind enough to excuse me if I ignore the Picayune Caucus for the time being.)
But what if, instead of raising the overall amount of taxes paid in Nevada, Democrats give working people a tax cut and make up the difference by raising taxes on somebody who is in a better position to pay? Would that also be too reckless, too irresponsible, to consider?
Because our current allocation of tax burden — the way tax revenues are structured — in Nevada has been badly broken for a long time, and the people who can least afford it get hit the hardest.
Sales taxes produce 30 percent of Nevada general fund revenue, easily the state’s largest source of money, and nearly twice as much as the second-largest source, the holy sacred gaming tax amen.
The nice thing about sales taxes, say people who like sales taxes, is that everybody pays the same rate. On the surface that sounds just as fair as fair can be.
But it’s not fair at all. The less money people make, the larger the share of their money they spend on necessary purchases, many of which include sales tax. Like fast food (especially in food desert neighborhoods that don’t have grocery stores). And kids’ clothes. And everyday household items.
Since the single largest source of tax revenue in Nevada is the tax that hits the poor the hardest — the regressive sales tax — it should come as no surprise that only two other states and the District of Columbia collect more money per person from sales taxes than Nevada does. The state’s per capita sales tax collection is $1,586, according to the Tax Foundation. That’s nearly twice the amount collected in Utah ($817 per capita) and also substantially more than amounts collected in the neighboring states of Arizona ($936), California ($894), Idaho ($961), and Oregon ($0 — no sales tax in Oregon).
Ah, but tourists! They’re the ones paying all those sales taxes, so Nevada is shifting the tax burden away from residents and on to people from other states, just like Nevada has always done because we think that’s so clever and sneaky. Or so the argument goes.
There is some truth to that. But it’s small comfort to people who are paying the nation’s 13th highest sales tax rate, and not just during an exciting four-day three-night regional accounting technology conference featuring a keynote address from Pat Sajak, but 365 days a year. Seriously, people, more than three-fourths of Nevada residents, i.e., the folks living and working in Clark County, are paying a sales tax rate of 8.15 percent. That’s crazy town.
There are any number of taxpayers that could more easily shoulder Nevada’s tax burden than the state’s working class. Everybody seems to have stopped talking about raising the gambling, er, gaming tax around here, out of exhaustion and surrender, probably. At least I’m pretty sure that’s why I quit talking about it. And yet even as gambling has expanded to more and more states over the years, Nevada, still America’s gambling giant, charges the smallest gaming tax of any state, at 6.75 percent. According to the American Gaming Association 2018 “State of the States” report, the only other states that even come close to Nevada’s meager gaming tax are South Dakota (9 percent), New Jersey (10.5 percent top rate) and Mississippi (11.2 percent). The other 20 or so states tracked in the AGA study have top-end gambling tax rates of at least 20 percent, and several of them have rates that nose past 40 or even 50 percent.
Alas, if there’s one thing I’ve learned in the 21 years I’ve been in Nevada, it is this: Now, clearly, is no time to raise the gaming tax.
Mining taxes in Nevada are a farce. If Nevada were a nation, most years it would be the world’s 3rd or 4th largest gold producer. Yet the general fund gets less money from mining taxes than it gets from cigarette taxes. Farce, I tell you.
Other enterprises that can better afford to shoulder Nevada’s tax burden than working Nevadans include but are not limited to: Banks and financial services firms (and if we’re not going to run payday lenders out of the state we should at least tax their socks off, no?), health care conglomerates; and of course, pot.
Those industries would howl in anguish.
But working Nevadans are in anguish every day, struggling to make ends meet.
Nevada not only has the fourth highest per capital sales tax collection, Nevada is also the fourth most economically unequal state in the nation, with the top 1 percent enjoying incomes 33 times larger than the bottom 99 percent.
Income distribution in Nevada, you see, is another thing that’s broke. There are a lot of big reasons for that, most of them involving national and global economic and structural forces that are far beyond Nevada’s control. But Nevada’s stark economic inequality is also a product of policy choices, including policy choices made in Nevada by governors and legislators.
Nevada has a Democratic governor for the first time in the 21st century, the first female majority Legislature in the history of the United States, and some of the most unequal economic conditions in the nation. By aggressively taking all things tax off the table from the get-go, Sisolak and the Democratic Legislature are being exactly what they don’t want to be: reckless and irresponsible.