Over 30 years ago Governor Bob Miller stood up for Nevada’s children in his 1989 State of the State speech.
“Because of the mining industry’s unwillingness to pay its fair share, we may not have enough money to achieve some of the goals we have set for better preparing Nevada’s children for the future.”
So little has changed that this statement may as well have been said during the 2020 special session. During the special session, legislators passed the first step to mine revenue reform in light of devastating cuts to our schools and healthcare. Out of three mine revenue proposals to be heard in the 2021 legislative session, AJR-1 goes the farthest to modernize Nevada’s mine tax and directly address the issues at hand through earmarking revenue for healthcare and education.
Nevada has the 5th most regressive tax structure in the nation, meaning those with the least money pay the highest tax rates. For example, Nevadans making less than $20,500 a year pay over 10 percent of their daily income in taxes, while the mining industry pays less than 1 percent of their gross income into the state general fund.
Mining pays so little due to the billions of dollars in annual deductions they don’t pay taxes on. Net proceeds means that mining deducts costs of operation ($5.3 billion in 2019) from their gross proceeds ($7.8 billion in 2019) and are then taxed on the resulting figure. AJR 1 would modernize Nevada’s mining taxes through switching to a 7.75 percent tax on their gross proceeds similar to the 6.75 percent tax on gross proceeds paid by gaming. When hardworking Nevadans are paying over 10 percent of their income in taxes, we are asking the mining industry to pull their weight at a 7.75 percent rate.
You can only mine where minerals are, and gold is in Nevada. Nevada is the leading gold producer in the US and when compared to nations the 5th leading gold producer in the world. Despite this leverage, 43 percent of gold/silver mines paid no taxes under net proceeds in 2019 due to massive deductions and despite making profits, based on the 2019-20 Nevada Net Proceeds of Minerals Bulletin.
Just three mining companies, Canada’s Barrick Gold, Colorado’s Newmont Corp., and Canada’s Kinross Gold account for 86 percent of gold production and thus nearly 80 percent of overall mining revenue in the state. These multinational companies, with many mines outside of Nevada as well, had an average 26.62 percent profit margin over the past 15 years. The three companies made $6.7 billion in profit in the 12 months preceding September 30, 2020 – as the rest of the world suffered during the economic contraction of the pandemic, gold boomed.
These companies in turn are mostly owned by a handful of hedge funds and megamillionaires. The $49 billion dollar Van Eck investment firm owns or manages between 8-12 percent of each of these companies. $9.7 trillion BlackRock, the world’s largest asset investor, holds between 5-10 percent of each of these companies. $6.2 trillion Vanguard and $5 trillion Fidelity both own or manage sizable shares of each of these companies. In short, the largest players in the financial world – hedge funds and investment houses chaired by mostly white men of immeasurable wealth – these are the owners of the gold mining companies. These are the people who derive their fantastic wealth from the ground underneath our state – and this is who we’re asking to pay their fair share.
Nevada is unique in our inability to benefit from mineral wealth when compared to other Western States. According to the Government Accountability Office, we are the only state that taxes net proceeds rather than gross proceeds without any additional extractive taxes.
This special treatment for corporations has consequences. Nevadans have long paid for foreign based mining corporations’ prosperity through failing schools and poor healthcare across the state. There is wealth in the state to invest in Nevadans, and the mining industry has an opportunity to work for the Nevadans they depend on for their massive profits.
Bob Miller was the last Democratic governor before Steve Sisolak. Governor Miller stood up for Nevada’s children and had a vision for equitable revenue. In 2020 we are still suffering, though passing AJR-1 in the 2021 legislative session provides some light at the end of the tunnel.
Progressive Leadership Alliance of Nevada, Center for Biological Diversity, Mi Familia Vota, Faith in Action NV, Sunrise Movement Reno, Battle Born Progress, Great Basin Resource Watch, Make the Road NV, and Make it Work NV have signed on in support of the above statement.