VICTOR JOECKS: Time for a tax cut in Nevada

Nevada has a reputation for being a low-tax state, but its residents haven’t seen a major tax cut in recent years.

On Monday, Nevada’s Economic Forum projected that the Legislature will have $12.6 billion to spend over the next two years. The actual amount is much higher because that number doesn’t include billions that go directly toward education funding.

This is a significant increase. In 2023, the forum projected the state would collect $11.7 billion in the biennium. In 2014, it estimated the state would take in $6.3 billion in revenue.

Short version: Nevada is raking in twice as much tax revenue as it did a decade ago, while its population grew by just 13.3 percent.

Why did tax collections increase so much? One reason is economic growth. Inflation is another. When prices go up, so do sales tax collections. But don’t overlook this cause: Politicians keep raising taxes.

I moved to Nevada in 2009. Since then, the Legislature has increased the sales tax, modified business tax, vehicle registration fees, cigarette tax and mining tax. The business license fee and gasoline tax have gone up. In 2015, then-Gov. Brian Sandoval created a new tax on business revenue called the commerce tax.

Nevada has lower taxes than California, but it’s not trending in the right direction. And don’t be fooled by gimmicks such as exempting diapers and feminine hygiene products from the sales tax.

Unsurprisingly, all of this money hasn’t fixed the problems in state government. Paying the same people more to do the same thing rarely does.

In January, The Associated Press reported on the many states that had cut their sales, gasoline, property or incomes taxes over the previous three years. Only two states hadn’t — Nevada and Alaska.

This gives Gov. Joe Lombardo and Republicans an opportunity — tax cuts. In his 2023 State of the State address, Lombardo proposed suspending the gas tax for a year. Democrats weren’t interested, and it didn’t go anywhere. That isn’t as necessary today, as Donald Trump’s pro-drilling policies are likely to lower gasoline prices.

A reduction in the sales tax would be an obvious choice. Prices remain high. Lowering the sales tax would allow people to keep more of their own money immediately. Republicans should also push a constitutional amendment to cap the combined state and local sales tax rate at 8 percent. Right now the sales tax in Clark County is 8.375 percent.

Another option is reducing vehicle registration fees. This tax is really obvious and onerous because it’s paid all at once. Proposing a flat $40 registration fee would be a major political winner.

Lombardo should propose a flat budget and tell Democrats he’s open to a 1-for-2 trade. He’ll agree to a $1 spending increase for every $2 toward permanent tax cuts or school choice scholarships.

What Lombardo shouldn’t do is pre-emptively agree to Democrats’ top priorities, such as $250 million for teacher raises. Doing so would give away his leverage. He tried that move in 2023, and Democrats trounced him.

And if Democrats don’t agree to Lombardo’s proposed tax cuts, he and legislative Republicans will have a great issue to run on in 2026.

Contact Victor Joecks at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on X.