Taxing policy

Recently a proposed initiative has been discussed in the media which suggests increasing the gross gaming revenue tax and eliminating property tax in Nevada. As attractive as that may sound, most of us who have a working knowledge of Nevada’s tax policy and structure are concerned that such a populist notion would be detrimental to the state’s fiscal health.

It is true the gross gaming revenue tax is relatively low compared to other gaming jurisdictions. But comparing Nevada’s tax policy to those of other states is like comparing apples to oranges. Nevada is a unique place. It is the only market in the world that is open to free-enterprise gaming. All other gaming jurisdictions have stipulations for entry and subject operators to exclusivity fees and rigorous selection processes limiting the number of companies able to do business.

Other jurisdictions do not rely upon gaming as a primary tax revenue source and possess much broader-based tax policies, including in many states a personal income tax. Nevada’s only barrier to entry is its world-renowned licensing program that objectively grants licenses to any person or entity that passes a rigorous background check and is approved by the Nevada State Gaming Commission. Nevada also depends heavily on gaming as a primary tax revenue source.

Nevada has no limit to the number of gaming companies that can operate in Nevada. This open market and a relatively low gaming tax encourage higher wages, increased investment and stronger competition, which has transformed Nevada and Las Vegas into a world-class international destination.

Nevada’s gross gaming revenue tax is by far the most fruitful gaming tax in the United States. According to the American Gaming Association, in 2006 Nevada collected more than $1 billion in gross gaming tax from Nevada gaming; Colorado conversely, with a tax rate nearly three times that of Nevada, collected only a little more than $100 million in tax revenue.

Not only does Nevada generate the most gaming tax dollars of any state, it also paid nearly $9 billion in wages and benefits to casino employees in 2006.

In addition, Nevada gaming and resorts provide nearly 50 percent of the state’s tax revenue, allowing Nevada to enjoy one of the most attractive personal and small business tax climates in the nation. Increasing the burden on one industry, such as gaming, when it already pays a disproportionate amount, is poor tax and budgetary policy. Such a policy puts Nevada citizens at risk and could adversely affect Nevada’s most important industry and as an effect, generate even less tax revenue.

Even more alarming is eliminating property taxes altogether. Every state in the union has a property tax — and for good reason. Property taxes are essential to the health of any state’s budget. They stabilize the state’s fiscal health and are appropriate and equitable taxes. The gross gaming tax is paid by one industry; property tax is paid by all industries and citizens who are privileged enough to own property.

In addition, Nevada’s residential real estate property tax is much lower than most other locations around the United States. Nevada’s property tax is capped at 3.64 percent of assessed value; the national average is 9.6 percent. Ironically, the gaming and hospitality industries are by far the largest property taxpayers in the state, generating nearly $650 million in 2006 for Nevada and its communities.

We Nevadans need to take responsibility, assess our needs and determine the best fiscal policy to address those needs. Recklessly suggesting ill-conceived changes in our state’s tax policy is a dangerous path that will undoubtedly result in negative outcomes reaching far beyond the gaming and tourism industries.

Bob Miller, former Nevada governor, is co-founder and the current co-chairman of the Nevada Tourism Alliance, which is a partnership of tourism and resort entities throughout the state that promote Nevada tourism.