It is a mantra expounded by Nevada Republicans and accepted without question by Nevada Democrats that Nevadans pay too much in taxes. This is why you will never hear any Democratic candidate or office holder, let alone State Senate Majority Leader Steven Horsford, mention the “T” word when addressing the state’s budget woes. I only call out the Dems because it feels as though the Republicans are a lost cause.
But is it true? Do Nevadans pay too much in taxes?
Well, if you look at the total tax revenues collected and divide those dollars by all the residents in the state, we fall near the middle of taxes collected per capita, so it might seem that yeah, Nevadans do pay enough in taxes.
But who actually pays those collected taxes?
Nevada residents bear the second lowest state and local tax burden of any state at 7.5 percent, behind only Alaska at 6.3 percent, according to a new report from the Washington, D.C.-based Tax Foundation.
[ . . . ]
In Nevada, the state ranked 28th in terms of total state and local tax collections per resident, the report found.
But only $1,988 in taxes were paid by each Nevada resident. Another $1,799 in taxes per each Nevada resident were collected from non-residents. These two categories taken together put Nevada at the 28th place ranking in total state and local tax collections.
Got that? Nearly half of the taxes collected in Nevada come from out-of-state residents. Read: tourists.
From Guy Rocha, public historian and former Nevada State Archivist:
The nation’s “Great Recession” is now technically in its 30th month. But Nevada’s casino industry was showing declining profits by 2007. The state is now some three years into this major economic slump and for the first time in some 90 years more people are leaving Nevada than moving here.. Even if the nation has begun the long journey out of recession, Nevada’s service economy will take much longer to recover. Current estimates range from another year to as much as eight years from now. In the end, casino gambling in Nevada will not be the growth industry it has been for almost 80 years. Nevada hotel/casino bankruptcies and closings are the order of the day.
At the 2011 legislative session, Nevada will be at another critical threshold. The state’s leadership, particularly the governor and legislature, must recognize that relying principally on a tourism-based economy will no longer support a prosperous future. The state is betting heavily that it can out-compete other states for hegemony in the renewable energy industry, particularly in geothermal technology. This initiative is not a quick fix. Success remains to be seen over the next ten years. Much grid infrastructure needs to be constructed to transmit and export electricity. Post-construction, wind farms and solar panel fields do not create many jobs. Attracting businesses to Nevada that manufacture the component infrastructure for the renewable energy industry is most desirable.
At the same time, Nevada needs to enhance its educational infrastructure to compete with states like Utah and Colorado who are also luring high-tech industries to their states and economically faring better than Nevada. Nevada may have some of the lowest taxes in the country, including being lower than Utah and Colorado, however high-tech firms looking to relocate from higher-tax states will weigh low taxes against educational infrastructure, find Nevada wanting, and go elsewhere.
By all indications, addressing Nevada’s economic problems will take years because the state was not proactive in strategically charting a more diversified economy. Resurgent casino-related tourism will not save the day this go-around. In the meantime, as evidenced by the dramatic budget cuts made in the 2010 special legislative session, Nevada will be hard pressed meeting the needs of a diminishing number of citizens for years to come.
Now that tourism has slowed (with only small breaths of recovery) and stuff we have hung our hat on for years has declined, and our other main industry, mining, continues to take its profits out of state and not pay its fair share in Nevada, what do we going to do? Are we going to continue to hope that outside residents pay our way? Are we going to continue to circle the drain with our fingers in our ears chanting, “No new taxes, no new taxes, no new taxes!”
Or are we Nevadans willing to step up and demand that all of us, not just our public workers, all of us, step into the breach?
Yeah, I’m saying it. It’s time for a state income tax. Hugh suggests taxing the top 2.7% who make over $200K in adjusted gross income.
That reaction will likely range from grandstanding squeals of outrage reiterating a stubborn knee-jerk refusal to even consider the possibility of a personal income tax in Nevada lest the very fabric of the universe be shorn to tatters and all of creation obliterated on the spot, on one end of the spectrum, to dumb silence on the other.
But Nevadans are renowned for wanting to tax somebody else — tourists, mostly.
Fine. To all but 2.7 percent of Nevadans, the rich are somebody else.
Let’s tax them.
I’d take it a step further. I’d rather see this (also from Hugh’s article):
If Nevada were to progressively tier its rates (as most states do), starting with a very small rate on those making, say, $75,000 followed by higher rates for higher incomes, the revenue potential could be substantially larger than $1.1 billion. And 80 percent of Nevadans filing tax returns would still pay nothing.
An income tax could conceivably let Nevada lower its regressive sales tax and lift the state’s tax burden from its current resting place – on the shoulders of the working poor – and shift it to those who are most able to pay.
