Key part of tax plan introduced in Nevada Senate
CARSON CITY, Nev. (AP) – A key element of a late-developing tax plan to erase a $121.5 million budget shortage was proposed Tuesday in the Nevada Senate – on the 100th day of a 120-day session.
SB571, sponsored by most of the Senate’s Republicans, provides a break of up to $500 in business activity taxes paid by about 30,000 companies with workers in Nevada.
The second part of the tax plan, expected later this week, will impose a franchise fee of $500 on those in-state companies and on about 142,000 out-of-state businesses that list Nevada as their home base. Many companies incorporate in Nevada even though they do business elsewhere because of tax advantages.
The effect of both bills is to collect at least $65 million a year in franchise fees from the out-of-state companies. The in-state firms would break even, because they’d pay reduced business activity taxes.
The maneuver was necessary to ensure the fee plan wouldn’t be opposed by companies with Nevada-based employees – and to ensure it wouldn’t be challenged in the courts by out-of-state firms that might claim they were being singled out unfairly.
”There’s no legal question now,” said Sen. Mark James, R-Las Vegas, chief sponsor of SB571. ”It’s not at all open to challenge.”
James also said he’s sticking with a conservative estimate that the tax plan will generate about $65 million a year for state coffers, even though the estimate doesn’t take into account expected growth in the number of firms incorporating in Nevada.
SB571 was referred to the Judiciary Committee, chaired by James, producing complaints from Senate Minority Leader Dina Titus, D-Las Vegas, who said it should go to the Taxation Committee.
James said he wanted the bill in Judiciary so that he could deal with it at the same time the panel considers the second bill, which includes the franchise fee plus various corporate law changes that are Judiciary’s responsibility.
Those changes include a provision that will make it tougher to sue businesses, whether they’re in Nevada in name only or have work forces here.
James said the limited liability provision should be attractive to all 172,000 of the companies that consider Nevada their home, because their business insurance costs should drop.
The new revenues are intended mainly as a way to provide Nevada teachers with pay raises of 2 percent in each of the coming two years.
If there’s revenue left over, Senate Majority Leader Bill Raggio, R-Reno, said his top priority is to see more money put into an emergency fund to help the state, university and school districts pay for rapidly rising utility bills.
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