Margin tax is bad for Nevada
For the Tribune
I am writing to you regarding this complex tax proposal which will appear on the Nevada 2014 statewide general election ballot — the gross margin tax, also referred to as the “margin tax initiative” and more often as the “education initiative.”
This tax will impose a huge new tax on our businesses, big and small alike. This tax does not care about the health of a business as it forces businesses to pay even if the business is losing money. This tax will not only kill job growth at a time when jobs are needed most, it will also, most certainly, deter new business from locating in Nevada. We need to attract new business to our state, not impose new taxes that turn them away — which is exactly what this tax will do.
Under the proposal, businesses with “gross” revenues of $1 million or more will be taxed 2 percent on their “gross” revenue. This means a business will be forced to give up 2 percent of any profit they might have earned and worse, forced to give up 2 percent even when they lose money. Many businesses today are lucky to finish a year with any net profit and celebrate if they finish a year with a 1-percent, 2-percent or 3-percent profit. Any business who has one dollar more than $1 million in “gross” revenue will pay the tax whether there is profit or not. Restaurants, veterinarians, ranchers, farmers, resorts, motels, auto repair shops, retail shops to name a few, businesses small and large alike will suffer; some will simply go out of business. Nevada’s business tax would become the highest in the entire country.
Is this the right approach to attract new job-creating businesses? No.
Will this put more Nevadan’s back to work? No.
Fellow Nevadans, let me ask you; If after the end of the year you had worked hard, made all your car payments, put food on the table for your family, made your mortgage payments or rent on time and then had to go get a loan to pay your taxes, would that be right? Would that be fair? No — but that is precisely what this margin tax will do to our businesses. In this real example, the following year not only do you have the same bills to pay but, you also have to pay that loan off, right? You would have to give something up because you only earn so much.
What is even worse about this proposed tax is that it does absolutely nothing to guarantee added revenue for education. The proposal is that poorly written. Will our deserving teachers be guaranteed an increase in their pay because of this tax? No. Will our children attending these schools see greater revenue going towards their classrooms? No.
All of us care about our schools and our educators, but this tax proposal is not the way to go about affecting change; and in fact, as stated above, will do nothing to help education, nothing.
Businesses faced with this tax will be forced to do one of two things. Cut their labor costs, e.g. lay off our neighbors or raise prices and more likely, do both. Raising prices in this economy is just another nail in the coffin for business and laying folks off, to me, is simply unacceptable.
Please join me in voting “no” on the margin tax/education initiative. It is bad for business, bad for all Nevadans and again does nothing to help our education system.
Thank you for taking the time to read my comments. Join me in voting “no” on the margin tax.
Dan Garrison is senior vice president and general manager of The Ridge Resorts.
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