INCLINE VILLAGE, Nev. — Incline Certified Public Accountant Wendy Mueller is concerned about recent discussions between Democratic state Legislators and the casino industry to raise business taxes.
The Las Vegas Review Journal first unearthed the secret meetings going on between key members of the Nevada Resort Association, Senate Majority Leader Steven Horsford and Assembly Speaker John Oceguera. Like a broken record the casino owners dusted off their old wish list for a business gross receipts tax to be imposed on all Nevada businesses except .... wait for it .... casinos.
This yen to punish all other Nevada businesses goes back a long way. In 1931 Nevada legalized gaming and with it a tax on casinos’ “gaming win.” Since casinos had to pay operating expenses and interest out of their “gaming win” they could conceivably book a loss and still be on the hook for state taxes so Nevada does impose an industry-specific form of gross receipts tax.
The Resort Association’s first efforts to have other Nevada businesses share their pain became public when Republican Kenny Guinn first ran for governor. Guinn, a very affable gentleman who never held political office, was the hand-picked candidate of the casinos. During his first term he announced that Nevada taxation policy suffered from a “structural defect” and he convened a committee to examine and report on it. He was easily elected to a second term and in 2003 proposed that Nevada enact a business gross receipts tax.
That proposal rent the legislature asunder as no other issue has since. Assembly Republican leader Lynn Hettrick believed such a tax would ruin Nevada’s attractiveness to business. He drew a line in the sand and recruited enough of his fellow GOP assembly members to deny Guinn the 2/3 majority required to enact a new tax. Guinn convened a special session and filed a law suit against the legislature to compel them to enact a budget based on his tax proposal. The Nevada Supreme Court briefly overturned Nevada’s 2/3 majority requirement and then changed their mind. The legislature reconvened and enacted a major tax increase by barely the 2/3 majority required but with no gross receipts tax. Hettrick had won.
Why are casinos so hell-bent on saddling the rest of Nevada business with a gross receipts tax? It may just be they want others to feel their pain but Economics Professor Tom Cargill of UNR thinks that by hurting other types of business gamers believe they can control Nevada politics and keep others who might compete with them for power out of Nevada.
Nevada Policy Research Institute followed up on the Review Journal’s story on the secret meetings. In a publication titled “The Tax-hike Conspiracy” they reported that Sen. Horsford, who runs an employee-training company bankrolled by the Nevada Resort Association and the Culinary Union, is carrying the industry’s water. He is secretly examining the Texas Franchise Tax on the theory that since Governor Sandoval has said he wants Nevada to compete with Texas for new businesses he could hardly complain if Nevada enacts a Texas-type business tax.
Wendy, who is also licensed in Texas, says the Texas Franchise Tax hits business “margins” defined as gross revenue less cost of goods sold, less compensation or less 30 percent of revenue, whichever is lower. However you cut it this is a gross receipts tax because you have to pay it whether or not you have any net profit.
It gives new meaning to the term: “Bad for business.”
— Jim Clark is president of Republican Advocates, a vice chair of the Washoe County GOP and a member of the Nevada GOP Central Committee. He can be contacted at email@example.com.