Every week, NPRI President Sharon Rossie writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.
Nevada’s business community has been struggling for the last eight years to continue the slow, but steady, recovery from the so called “great recession.”
You would think that government would be eager to make it as easy as possible for companies — large, medium and small — to hire workers, grow their business and turn a profit.
Instead, during the 2015 legislative session, lawmakers decided to increase the tax burden on existing Nevada businesses, by roughly $1.5 billion.
The most devastating of the taxes approved in 2015 is undoubtedly the Commerce Tax — which is scheduled to take effect this summer.
Simply paying the Commerce Tax will be bad enough for growing businesses, but compliance with the new tax will be another nightmare altogether.
Designed to tax the gross receipts of any business that reports more than $4 million in total revenue, the Commerce Tax divides the state’s economy into 26 different categories, each with its own tax rate. Business owners will have to determine which of the 26 rates apply to their business, report their total revenue and pay the determined amount — regardless of whether or not they even managed to squeak out a profit in the previous year.
And why are there 26 different categories and tax rates? Well, as the Tax Foundation pointed out, it’s because the authors of the tax relied on a 2011 study on the Texas gross receipt tax.
In other words, Nevada’s Commerce Tax was designed using a one-year snap-shot of economic activity in some other state.
Not only is the Commerce Tax punitive, unnecessary and burdensome, but it wasn’t even designed with Nevada’s small business community in mind.
And that new tax is only a fraction of the total tax package set to take effect in 2016. Nearly $1.5 billion in new or increased taxes are about to hit the Silver State’s taxpayers — at a time when businesses are more desperate than ever for pro-growth reforms.
As the longest serving chief justice in US Supreme Court history, John Marshall, once said, “The power to tax is the power to destroy.” Job creators who are foregoing expansion in an effort to prepare for the upcoming tax hikes know exactly what Marshall was warning against. Nevada’s leaders, on the other hand, seem more than happy to remain in the dark.
As taxpayers, it’s our job to clue them in.
Warm regards,
Sharon J. Rossie
NPRI President
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