Jim Clark: County tax initiatives update
August 5, 2013
It's time for an update on some tax increase proposals floating around Washoe County and Nevada.
First of all please accept my sincere mea culpa. Last month I wrote about the proposed gross margins business tax proposal, a teacher union initiative, which will be on the November, 2014 ballot.
I wrote: "The 'tax base' is derived by deducting from gross receipts, at the option of the taxpayer: 1. 70 percent of gross receipts, 2. gross receipts less personnel costs or 3. gross receipts less cost of goods sold."
It's much worse than that.
Option No. 1 allows a deduction of only 30 percent of gross revenues to establish a business' taxable base which is then subjected to a 2 percent tax. So an enterprise with total gross revenues of $10 million would owe an annual tax of 2 percent X $ 7 million or $140,000 under the scheme whether or not it is making a profit.
Note that by exempting businesses with gross revenues under $1 million the proposal is punitive to smaller concerns which are trying to grow because the minute your gross receipts go over $999,999 the tax kicks in but not before.
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This is similar to the Obamacare provision that requires full employee health insurance when the company has 50 or more employees thereby incenting businesses to either not grow or to hire only part time staff. We're on the road to Socialism. I hope we can stop.
Locally there have been some developments with Assembly Bill 46. Readers will recall that AB 46, which would raise county sales taxes by $0.0025 and real property taxes by a nickel per $100 assessed valuation to raise money for school maintenance needs, was delegated to the Washoe County Commission for a decision.
Last month, at the first of three scheduled public meetings on the matter, a person representing the Incline Village Board of Realtors told commissioners that Realtors support AB 46 subject to the revenues not being used to borrow by issuing bonds.
I asked some local Realtors and was eventually referred to their lobbyist. He acknowledged that the right to use revenues to issue bonds is in the bill and can not be changed by county commissioners.
He explained that he had talked with School Board President Barbara Clark and that she agreed not to issue bonds. I asked what would happen if she retires, loses her next election or the other 6 trustees decide to issue bonds.
There was no answer. It seems uncharacteristic of a Realtor organization to support a property tax increase but I guess stranger things have happened.
Meanwhile the Legislative Counsel Bureau, attorneys who work for the legislature, have issued an opinion letter to the effect that if the Washoe Commission approves AB 46 they can not impose any reporting requirement or other oversight on how the school district spends the money.
The opinion states that the grant of legislative authority is permissive and that the commission may approve either, both or neither tax increase which raises the specter of come sort of compromise.
It states that the commission may limit the duration of the taxing authority so the commission can impose a "sunset" either at the time of approval or later after the tax is in place (provided that if the school district issues bonds the commission may not limit AB 46 taxes which may be required to pay bond holders).
The opinion concludes by saying that the commission could approve either or both tax increases at rates less than those provided by AB 46.
Developments will continue to be brought to you by the Bonanza as they come to light.
Jim Clark is president of Republican Advocates; he has served on the Washoe County and Nevada State GOP Central Committees. He can be reached at email@example.com.