Nevada’s small businesses are just recovering from the recession, during which many accumulated much debt just to keep the doors open. They did not get a bailout. They’ll be paying down that debt for years to come. And while things are looking up again for businesses in Southern Nevada, many are operating with a very slim profit margin. Yet the Nevada State Education Association feels now is the time to propose a tax on any business that GROSSES more than $1 million annually, regardless of whether that business is actually profitable.
This question gives voters the opportunity to spend someone else’s hard-earned money – something I feel is positively shameful, especially considering the majority of those affected will be small businesses. (Proponents of Question 3 want voters to believe that only mega corporations gross more than $1 million, but the reality is that tons of small businesses gross $1 million – but likely only net 3% of that.)
According to the Henderson Chamber of Commerce, the measure was previously brought to the Nevada Legislature, which ignored it, forcing the issue to the ballot. So now it’s up to voters who may or may not understand its implications – on business, on Nevada’s economic development and on employees. It’s terribly confusing, and I’ve spent quite a few hours researching it as well as what both the opposition and the proponents have to say about it; who has time for all of that?
In short, the ballot measure would impose a 2% tax rate on the entity’s taxable margin. In an example where a business grossing $1,000,001 has a taxable margin that’s $463,548 (total income less payroll), the business would be required to pay a $9,271 tax bill – even if that bill would put them into the red. If the business is profitable and, say, has $30,000 profit before paying the tax, they would be left with only $20,729 profit. No one goes into businesses – working 10 to 12 hours a day, often six or seven days a week, and taking on the responsibility of being in charge of the livelihoods of their employees – for 2% profit, which would likely be put back into the company anyway for things like paying down debt.
Furthermore, the Nevada Legislature has the authority to increase that percentage in a few years, should they decide the tax didn’t yield enough money.
The NSEA says we should all just do it for the children. But here’s the thing – the question’s language is vague and doesn’t actually ensure accountability. It also doesn’t ensure it would INCREASE the very fund to which it goes. Meaning: Every year, the Legislature determines how much money should be spent per student. They then add this up and transfer that amount of money from the General Fund into the Education Fund (or whatever its technical name is).
So say – for the sake of easy numbers – they usually transfer $400 million from the General Fund into the Education Fund.* Now say this Margin Tax brings in $400 million. There’s no guarantee that that the Legislature won’t continue to only budget $400 million for the Education Fund. (In fact, this very thing already happened with a 2009 lodging tax that was designated for education.) But now – should Question 3 pass – the funds will come from Nevada’s businesses, while the previous $400 million allocated from the General Fund for education can go anywhere. Are things guaranteed to happen this way? No. Are they guaranteed to be the panacea Clark County has been searching for to fix all of its education woes? No. Does it include any sort of stipulations that the Clark County School district must reassess how current funds are being allocated, as businesses did during the recession? No, this question tells us we should just throw money at the problem and hope it goes away.
All in all, Question 3 is a poorly worded bill that a.) does not demand accountability; b.) primes the pump for the Nevada Legislature to avoid the same budget balancing issue they faced at the end of the 2013 Legislative session; and c.) attacks local business (mostly small businesses, at that) – the very entities that provide so many of us with jobs – all while waving the banner of “Support education!”
Needless to say, I will be voting NO on Question 3 this Nov. 4. Considering Henderson voters in 2012 voted “no” for a 2-cent increase in property taxes for every $100 in assessed value to save Henderson Libraries AND Clark County voters in 2012 voted “no” for an additional property tax rate of up to 21.2 cents per $100 in assessed value for capital construction for schools for a period of up to six years, I hope our community will treat our businesses’ money as they would their own and join me in voting “no.”
Melissa Biernacinski serves as Director of Media Relations for Imagine Communications. Email Melissa at email@example.com.
* Actual number was about $2.5 billion in 2013, according to the Reno Gazette Journal.