Margin Tax- Are you Paying Attention

The margin tax proposed in the Education Initiative will not improve education in Nevada and will, instead, have serious unintended negative consequences for Nevada’s workers, families and businesses. The Chamber (Reno/Sparks) is committed to fighting this union-backed initiative and to preventing Nevadans from being misled into supporting this deceptive proposal.

The degree of deception is appalling, beginning with the initiative’s title. How can you call something an Education Initiative when it has absolutely nothing to do with education? Even the word “education” only appears in the title and once in the summary; otherwise, the entire proposal concerns implementing a margin tax to generate additional state funds, which might or might not be used for classroom spending. The proposed legislation itself does not guarantee that one penny from the tax be used for additional education funding.

In short, absolutely nothing about education in Nevada would change as a result of the initiative passing. Nothing.

We also are concerned about all the undisclosed ramifications, such as that taxpayer information will be posted on the Internet in clear violation of taxpayer privacy rights. This fact is omitted from the summary that petition signers will see when this initiative is circulated.

Another important omission is the fact that failing businesses, businesses that make little profit or that are actually losing money, will have to pay this tax. A tax on “margin” is not the same as a tax on “profit margin,” a distinction petition backers tend to gloss over.

Proponents claim the $1 million exemption protects small businesses. Not true.

The way that “total revenue” must be calculated will put the income of many small businesses over $1 million.

Those small businesses include many franchise operators with a single location, independently owned gas stations, medical clinics, ranches and a host of others.

In reality, only tiny businesses will be exempt, and many small businesses will find their entire profit wiped out by this tax.

Do rational people really believe that hitting businesses with a new tax is the smart thing to do during a recession? Of course not. In fact, a version of this proposal was introduced in the 2011 Legislature and generated such a negative response that it never was voted on. So, margin-tax sponsors put it in an initiative petition and wrapped it in an “education” blanket, so people will be misled into supporting it.

The Chamber (Reno/Sparks) strongly believes that setting tax policy through initiatives is dangerous and that this particular proposal will cause a great deal of harm to businesses and families in Nevada.

Tray Abney director of government relations for The Reno/Sparks Chamber.