“[A] flawed initiative that will cost many of our members their jobs and raise the cost of living on Nevadans on a fixed income and on citizens that are still struggling to make ends meet after years of a terrible recession.” That criticism of the Margin Tax Initiative comes not from a business owner but from Danny Thompson of the Nevada AFL-CIO, one of the original sponsors of the initiative but whose Committee on Political Action voted by more than 2-to-1 recently to oppose the measure.
The Margin Tax, known by its proponents as the Education Initiative will appear on the ballot in November as Question 3. It is a destructive tax that will kill jobs and does not guarantee one additional dollar for education, “a false dedication to education” as a speaker representing the Coalition to Defeat the Margin Tax Initiative termed it.
The NSA and FCA’s Summer Membership Meeting (“Vote No on Question 3”, The Margin Tax Initiative: A False Dedication to Education) will feature guest speakers from the Coalition to Defeat the Margin Tax Initiative, describing the importance of defeating this initiative and how to do it. The NSA is a member of the Coalition to Defeat the Margin Tax Initiative.
The meeting will be held on Wednesday, June 11, 2014 in the 2nd Floor Conference Center of the Eastside Cannery, 5255 Boulder Highway, with check-in beginning at 11:15 am and the luncheon at 11:30. (Click here for registration form)
The Coalition details some of the destructive effects the tax will have – hurting workers, consumers, small (and large) businesses and the economy. [Click on the photo for a larger view or get a pdf version.]
A report by Applied Analysis determined the Margin Tax would result in the loss of nearly 9,000 private sector jobs and reduce annual economic activity by $1.1 billion. The Coalition reports that prices on a wide variety of goods and services, including gas, food, clothing, rent, healthcare and childcare, will increase. Another study by Applied Analysis calculated that Nevadans would face $60 million in higher insurance premiums annually were Question 3 to pass.
The Margin Tax would increase the tax burden on the average business by more than five times and convert Nevada from a state among those with the lowest business taxes to one of the 3 or 4 highest in the nation. The initiative would create the equivalent of about a 15% corporate income tax, nearly double California’s 8.8% rate.
Since the tax is levied on gross receipts instead of profits, even businesses that are losing money would be forced to pay. The Nevada Taxpayers Association has declared that for businesses struggling to keep their doors open the MTI may be the straw breaking the camel’s back.
Proponents of Question 3 claim Nevada businesses do not pay their fair share in taxes but a study by Ernst & Young that determined Nevada businesses account for 52% of all state and local tax collections, the 12th-highest figure in the nation and well above the national average of 45%. Though Question 3 was ostensibly based upon Texas’s Franchise Tax, there are significant differences in Silver State’s version that make it much more onerous and destructive than the Lone Star State’s.