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Faraday deal is government picking winners and losers, anointing small businesses as the losers

LAS VEGAS — Responding to news that Gov. Sandoval and lawmakers approved a series of tax breaks and subsidies for Faraday Future during a special session late last week, Nevada Policy Research Institute Communications Director Michael Schaus released the following statement:

The approval of more than $300 million of transferable tax credits, abatements and handouts to Faraday Futures is just the latest example of state politicians trying to pick winners and losers.

Just months ago, Nevada lawmakers imposed the largest tax increase in state history. Then, last week, they went out of their way to give hefty handouts to a politically connected electric-car company with no real-world record.

Yes, low taxes and “incentives” can attract new businesses to a state — but what message is being given to job creators, entrepreneurs and small businesses already operating in Nevada? Where are their tax incentives? In contrast to Faraday, Nevada’s job creators will be laboring under a slew of burdensome new taxes.

The 4,500 new jobs Faraday promises to create — a number less than one-third of what Nevada’s small businesses create every year, according to the Small Business Administration — sounds impressive in a news conference, but such projections are far from guaranteed.

Recall the similar rose-colored projections from the Sandoval administration when Tesla promised to create 700 jobs in 2015 as part of their new Gigafactory. So far, only a paltry 24 positions have been created, despite the substantial tax breaks provided to the new facility.

Politicians promising jobs and entrepreneurs actually creating jobs are obviously two very different things.

Genuine across-the-board incentives, such as lower taxes on current Nevada taxpayers and job creators, would do much more to spark economic growth than channeling hundreds of millions of dollars to secretive, unproven electric-car companies.

As we’ve seen too many times already, it’s the average taxpayer who loses when politicians in government attempt to play God with the economy.
 

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Michael Schaus is communications director of the Nevada Policy Research Institute, a nonpartisan, free-market think tank. For more visit http://npri.org.

Faraday deal shows low taxes matter

For Immediate Release

 

 

Contact Michael Schaus, 702-222-0642

 

 

NPRI: Faraday deal shows low taxes matter

LAS VEGAS — In response to the news that Gov. Brian Sandoval is calling a special session to try and pass tax breaks and subsidies for Faraday Future, Nevada Policy Research Institute executive vice president Victor Joecks released the following comments.

Today’s announcement of abatements and handouts for Faraday demonstrate that low taxes matter to businesses, despite the rhetoric coming from the last legislative session.

That’s when Gov. Sandoval and legislators passed a $1.5 billion tax increase, the largest in state history that included hiking the modified business tax and the creation of a new gross receipts tax.

Sandoval and his economic development chief Steve Hill told lawmakers that Nevada needed higher taxes to increase education spending in order to attract businesses to Nevada and diversify its tax base.

Just six months later, Sandoval is calling a special session to provide over $200 million in tax breaks for Faraday, including $38 million in indirect subsidies.

You can’t have it both ways. If lower taxes are good for out-of-state billionaires, they’re also important for Nevada’s small, medium and large businesses and the hundreds of thousands of Nevadans they currently employee.

Lawmakers shouldn’t pick winners and losers in the economy. Instead of considering special handouts for the politically connected, lawmakers should remove the excessive tax burden on Nevada businesses and families.

Joecks noted that previously approved transferable tax credits caused the May Economic Forum projection to reduce state revenue projections by over $150 million. To fill that gap, Sen. Majority Leader Michael Roberson and Sandoval supported a higher cigarette tax. If transferable tax credits are approved for Faraday, they will decrease projected tax revenue in future budgets and create pressure to raise taxes on Nevada businesses and individuals that aren’t as politically connected.

“There is going to be enormous pressure from Sandoval to pass these handouts by the end of next week, despite their impact on existing Nevada businesses and the state’s long-term liability,” concluded Joecks. “Citizens will be grateful to lawmakers who ensure that any potential legislation doesn’t include direct or indirect subsidies, like tax-increment financing or transferable tax credits, and that any deal doesn’t set them up for future tax hikes.

“Low taxes are good not only for Faraday, but for the rest of Nevada’s economy too.”

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Nevada Policy Research Institute 7130 Placid St., Las Vegas, NV 89119
Phone: 702-222-0642 Fax: 702-227-0927 Web site: http://npri.org

Study: The high price Nevadans pay for ‘free’ money from the federal government

For immediate release
Contact Michael Schaus, 702-222-0642

LAS VEGAS — Lawmakers on the local, state and federal level almost always brag about the benefits of “free” money from the federal government, but it turns out that every dollar Nevada got from the federal government in 2012 resulted in more than a half dollar in new state and local tax increases. 

The Nevada Policy Research Institute’s comprehensive study, The Impact of Federal Transfers on State and Local Spending, demonstrates the “ratcheting” effect of federal spending on state budgets. As federal funds pour in to state and local programs through the Affordable Care Act, Medicare and stimulus projects, state and local governments find themselves stuck with unexpectedly skyrocketing costs. 

NPRI’s adjunct scholar Eric Fruits Ph.D., president of Economics International Corp., used data collected over the last four decades to hone in on the impact federal money has had on state and local governments throughout the country. The results point to a disturbing pattern as the federal government expands transfers to the states. 

Every dollar Nevada received from the federal government in 2012 resulted in a state and local tax hike of $0.56. A hypothetical 10 percent increase in the amount of federal transfers would mean approximately $200 million more in spending from state and local own sources — translating to an additional $70 per person in new state and local taxes and charges. 

And with Nevada’s governor and legislature embracing the Affordable Care Act’s Medicaid expansions, such tax increases are almost certainly in Nevada’s future, according to Dr. Fruits.

“Importantly, our results suggest that the increases in federal grants to state and local governments associated with [the Affordable Care Act’s] Medicaid expansion will have significant future tax implications at the state and local level,” Dr. Fruits explained. 

As the study demonstrates, there’s “no such thing as a free lunch.” It’s something taxpayers should keep in mind next time politicians talk about “free” federal money.

Read more: 
•    The Impact of Federal Transfers on State and Local Spending
 

Proposed minimum wage increase would kill jobs for inexperienced workers

LAS VEGAS — A constitutional amendment filed to increase Nevada’s minimum wage over the next eight years would actually hurt most of the workers it is supposed to benefit, warns Victor Joecks, executive vice president of the Nevada Policy Research Institute.

“The reason, as most small business owners know,” said Joecks, “is that, if enacted, the proposed minimum wage increase would kill jobs for teenagers, inexperienced workers and people who are re-entering the workforce.

“That’s the conclusion of the vast majority of economists of all political stripes and even federal government studies.”

Joecks continued: 

Ultimately, it is the workers who get paid the least that will suffer the most from hikes in the minimum wage — with many of them losing their jobs as businesses close or turn to automation to replace entry-level jobs.

The primary value of entry-level jobs is that they allow workers to gain basic employment skills, which in turn allows them to earn higher wages in the future. Raising the minimum wage, however, makes it harder for low skill workers to get those first jobs. Having that first job is crucial, because two-thirds of minimum wage workers earn a raise within a year.

Currently, workers under 18 are exempt from Nevada’s inflated minimum wage requirements. This allows new workers to gain the experience and skills needed to increase their productivity and earn higher wages over time. This constitutional amendment, though, would remove that exemption and increase Nevada’s teenage unemployment, which currently sits at 23.6 percent.

A minimum wage increase would disproportionately hurt Nevada workers who hope to use low-paying jobs as stepping stones to better careers. Setting the minimum wage at $13 per hour is not only anti-business, but anti-worker as well.

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Sandoval, Republican leaders earn low marks in NPRI’s 2015 Legislative Report Card

For Immediate Release

Contact Ashley Johnson, 702-222-0642

 

LAS VEGAS — Just 20 lawmakers achieved voting records generally favorable to taxpayers during the 2015 Legislative Session, a new report from the Nevada Policy Research Institute finds.

NPRI’s 2015 edition of its biennial Nevada Legislative Session Review & Report Card, released today, scores lawmakers on over 80 floor votes and includes a detailed, insider narrative of the session by NPRI executive vice president Victor Joecks.

Although Republicans had unexpectedly gained control of both Legislative chambers, Gov. Brian Sandoval and Sen. Majority Leader Michael Roberson used their influence to push successfully for the largest tax increase in state history, while working behind the scenes to stop or weaken various pension and labor reforms.

The report-card rankings are calculated by the same system that the National Taxpayers Union uses to rate members of Congress. Based on a scale of zero through 100, the rankings at the high end of the scale indicate a greater commitment to low taxes, limited, accountable government and implementation of needed reforms. Legislators who score 50 or above are generally considered allies of economic liberty.

Only 20 of the 63 members of the Legislature earned scores at or above 50 percent. A quartet of Republican Assemblywomen, however, earned scores above 90 percent — better than any lawmaker scored during the 2013 Session.

Assemblywoman Robin Titus topped all lawmakers with score of 93.17 percent and earned the distinction of the “taxpayer’s best friend.” Assemblywomen Shelly Shelton, 92.86 percent, Michele Fiore, 92.78 percent, and Jill Dickman, 90.68 percent, also represented taxpayers extremely well. Men scoring highest in the Assembly included Brent Jones, 89.75 percent, and John Ellison, 89.42 percent. In the Senate, Don Gustavson, at 86.2 percent, had the highest score.

At the other end, Assemblywomen Maggie Carlton earned just a 11.8 percent — the lowest score of any politician.

Based on his decision to sign the largest tax increase in state history and bloated spending bills, Gov. Sandoval earned a score of just 43.48 percent. Sandoval and other lawmakers did receive credit for important reform bills like SB302, creating Education Savings Accounts, and AB125, reforming Nevada’s construction defects law.

“These grades make clear who voted on behalf of taxpayers and who decided to please the special-interest lobbyists that swarmed Carson City,” said Joecks. “When talking with voters, Republican candidates pledged their support for lower taxes and less government. Unfortunately, many of those same politicians went back on their commitments and voted for the largest tax increase in Nevada history.

“Because most Nevadans don’t have time to track over 80 floor votes, NPRI’s scorecard provides a consolidated measurement of how a lawmaker’s votes advanced or hindered economic liberty.”

Elected Republican legislative leaders had some of the lowest scores in their caucuses. Speaker John Hambrick and Assembly Majority Leader Paul Anderson, who the report notes was the individual widely considered the driving force in Assembly leadership, had identical scores of 43.79 percent. The average for the Assembly caucus, however, was 65.37 percent.

Roberson and five other Republican Senators, Greg Brower, Patricia Farley, Joe Hardy, Becky Harris and Ben Kieckhefer, all had identical scores, earning grades of just 38.72 percent. The Senate Republican caucus average was 49.77 percent.

“The scores from the Report Card also show just how important leadership is in the Legislative process. With left-leaning Republicans at the helm, lawmakers considered the largest tax increase in state history, instead of pushing through substantive and needed labor and pension reforms,” said Joecks.

The narrative also explains how Assembly leaders undercut conservatives in the GOP caucus who were open to compromise, in order to pass even more liberal measures, such as SB207, a $4-plus billion property tax increase that was imposed with no popular vote.

The 2015 Nevada Legislative Session Review & Report Card also identifies the behind-the-scenes maneuvering that led to the passage of SB302. Among other factors, the capitol building buzzed with reports that Assemblyman Pat Hickey told Sandoval that Hickey wouldn’t support Sandoval’s tax increases without the passage of SB302. In the week preceding the tax vote, SB302 passed Senate Finance, the Senate, Assembly Education and the Assembly in the course of four days.

“The grades in NPRI’s Report Card simply reflect a lawmaker’s record. These scores reveal lawmaker’s votes, not often-hollow promises made to constituents,” noted Joecks.

“These Report Card scores give voters the ability to cut through political rhetoric and identify whether their legislators are actually committed to advancing conservative goals or are just campaigning as conservatives to get elected.”

Read more:

 

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Study: New power plant would cost ratepayers hundreds of millions

For immediate release
Contact Victor Joecks, 702-222-0642

LAS VEGAS — NV Energy’s proposal to build a new 706 MW natural gas plant would cost ratepayers $115 million in 2020 and over $600 million from 2020-2025. That’s the findings of an economic analysis of the plan released today by the Nevada Policy Research Institute.

Entitled “Power plant proposal would increase power prices in Nevada,” the study finds the higher electricity rates would reduce employment by 1,614 jobs in 2020 by increasing power rates by 3.2 percent. Those rate increases would cost the average consumer an additional $31 a year and the average industrial rate payer $9,970 a year.

Authored by David G. Tuerck and Paul Bachman, economists with the Beacon Hill Institute, the study also examines the impact of 2013’s SB123, including how it was modified by AB498 during the last legislative session.

 “NV Energy’s current proposal to build a new power plant should not be considered in a vacuum,” said Bachman. “Without SB123’s order to shut down cheap and reliable coal power plants, no new natural gas plant would even be under consideration.

“This economic analysis examines the cost to consumers of building a new natural-gas power plant by first examining the impact of SB123 and AB498 on electricity prices and Nevada’s economy.”

With a new power plant, Tuerck and Bachman find that SB123, as modified by AB498, will cost consumers $206 million in 2020, destroying 2,925 jobs in Nevada.

Without building the new power plant, SB123, as modified by AB498, will cost consumers $91 million in 2020, eliminating 1,311 jobs.

 “Unfortunately, the PUC can’t undo all the damage caused by Carson City politicians,” said Bachman. “The decision to build or not build a new 706 MW gas-fired power, however, does give the commission the ability to mitigate some of the expensive mandates forced on consumers by SB123 and AB498.”

Read more:

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Media Mentions

Daily Signal article featuring quotes by Nevada Policy President, John Tsarpalas

Interview by Nevada Policy President, John Tsarpalas

Op-ed for Nevada Business by Nevada Policy’s Eric Bihr

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