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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