NPRI: Calls for higher taxes based on faulty premise >> Nevada Policy Research Institute

NPRI: Calls for higher taxes based on faulty premise

Tuesday, March 5, 2013

LAS VEGAS — In response to an announcement by Senate Republican leadership that they support raising mining taxes as an alternative to the margin tax, NPRI’s Deputy Policy Director Geoffrey Lawrence released the following comments:

Calls for higher Nevada taxes — whether on the mining industry or on everyone else through the job-killing margin tax — regularly rely on a faulty premise: that Nevada needs to pour always more dollars into its monopolistic government schools.

Nevada’s kids deserve the best education in the world, but that won’t come until politicians admit that ever-higher public-school spending doesn’t increase student achievement — as the last 50 years in Nevada have demonstrated.

As measured by the Department of Education, in 1960, Nevada spent $430 a student. In 2009, we spent $8,865 a student. That figure doesn’t even include all of Nevada’s education spending, but it does show that nearly tripling inflation-adjusted per-pupil spending in the last 50 years hasn’t grown student achievement or increased graduation rates.

Lawrence noted that Nevada spends more per-pupil than a majority of its neighboring states, including Arizona, which has similar demographics to Nevada, but Nevada gets worse results. He added:

Nevada’s education system is broken. Because of NRS 288, Nevada’s collective bargaining law, union bosses have more control over state education spending than do legislators or school boards. Poor and middle-class parents, deprived of school choice, don’t have the ability of wealthy families to opt out of the failing government-school monopoly and send their children to better private alternatives.

Spending more on the same broken system will only entrench the status quo — ensuring that tens of thousands of additional students every year will fail to read, learn and graduate.

Commenting directly on the proposals, Lawrence continued:

Tax policy should secure a level playing field for all industries and entrepreneurs. It shouldn't be used to punish one industry for its success or to bias individuals' decisions about production or spending patterns. Regarding mining, the more important discussion should be about how Nevada can take back the 85 percent of its lands currently controlled by the federal government. If these lands became available for private ownership and development, then state and local governments could reap immediate revenues from private auction as well as ongoing property tax revenues while miners could claim ownership over the minerals contained in their property without jumping through complex bureaucratic hoops.

The people of Nevada won't benefit from feeding the power of the state’s political class with additional money from an increased mining tax. But they would benefit even less from a margin tax. Incredibly destructive, the margin tax hastens the closure of businesses that are already struggling, and it crushes high-volume businesses with low profit margins.

In Texas, where the margin-tax rate is just half of the proposed rate in Initiative Petition 1, 20 percent of small businesses laid off employees after the margin tax was enacted. Forty percent of small businesses saw an increase in their state tax liability of over 500 percent. Furthermore, 3 percent of small-business owners in Texas had decided to close their doors as a result of the margin tax and nearly 14 percent had to drop health care or other benefits.

Genuinely solving Nevada’s problems will not involve taking more money from taxpayers, but spending the money government already collects more wisely.

Lawrence concluded that NPRI’s Solutions 2013 publication contains solutions in 39 policy areas that allow government to achieve better results for less money. "It doesn't make sense to raise taxes when we know there are so many areas of ineffective spending," he said.

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