Business group fails to take stand on tax

Sources said the board was expected to endorse a tax plan at Tuesday’s meeting, after reviewing a series of studies on competing plans prepared by an expert hired by the GEA.

Instead, the board voted to continue to study tax plans. “The board’s going through an ongoing, deliberative process,” said spokesman Andrew Doughman. He said no deadline has been set for reaching a decision.

It’s a disappointing development, since the GEA has sought to distinguish itself from a rival business group, the Las Vegas Metro Chamber of Commerce. The GEA’s CEO, Tom Skancke, has sought to lead the conversation on improving education, after his group reported that businesses often cite a struggling school system as a reason for not relocating to Nevada.

But now, we’re left to ask: Why do we need another business group that agrees on the need for education reform and additional revenue, but steadfastly refuses to take a stand on how that should be done? We already have a group that refuses to take a stand on taxes, and it’s called the Las Vegas Metro Chamber of Commerce. (Ironically enough, Chamber President Kristen McMillan sits on the GEA’s executive committee, just as Skancke sits on the chamber’s executive committee.)

Like the GEA, the Chamber has declined repeatedly to endorse a specific tax plan, even after it commissioned the Washington-based Tax Foundation to study Nevada’s tax system. That study concluded a sales tax on services would best reflect Nevada’s economy. Yet, despite presenting the idea to editorial boards and the Legislature (and even hosting a TV special on it) the Chamber has refused to endorse the findings of the Tax Foundation report.

The GEA’s punt is especially disappointing because the group took the time to review the modified business (payroll) tax and the Tax Foundation’s study, as well as Gov. Brian Sandoval’s proposed increase in business license fees. The upshot of the GEA’s studies, performed by economist Susanne Trimbath, is that the governor’s tax plan will have a “minimal impact” on economic development. (That report is linked below.)

Moreover, a brand-new study by economist John Restrepo and UNLV Professor Alan Schlottmann concludes that “in our opinion, given the current Nevada economy and tax system, constitutional issues and time constraints, the option of an expanded business tax or flat license fee is the best avenue for viable legislative discussion of tax reform.” That report specifically rejects the conclusion of the chamber-commissioned (but not endorsed!) Tax Foundation report that extending the sales tax on services is the way to go. (That report is also linked below.)

Despite those conclusions, however, the GEA’s board elected to duck the issue, at least for now. And that seems awfully, painfully familiar. Are we going to follow the same dog-earned, faded-page script we’ve been using in Carson City for years, the one in which business leaders say they’ve got to “study” the various plans, immerse themselves in the details, in order to “understand” how it affects them? That “study” generally continues for the first two-thirds of the legislative session, right up until the Economic Forum provides the final budget numbers. At that point, the business community pivots to the final page of its script, which says: We can’t possibly figure out what to do now, with just a month left in the session! And then everybody rushes around to piece together a Frankensteinian tax package to get through the next two years without imposing any kind of levy on business income.

For some, that’s what victory looks like. And it’s happened time and again for decades.

Is that what we’re going to see here? Is that what the board of the GEA represents? Or is there a remote chance that we’ll actually see a responsible voice from business, one that says (as Skancke did in an email to his members leading up to Tuesday’s meeting) that it’s incumbent upon the GEA to take a stand on revenue as well as reform? Will the GEA be the group that stands up and shows intellectual honesty when it comes to tax policy?

Hope springs eternal, but there’s a running clock on this decision.

UPDATE: According to my colleague Jon Ralston, the tension between the GEA and the Chamber is bad enough that two executives of Switch Communications have resigned from the respective boards, including Missy Young, who served as chairwoman of the GEA. The disagreement (GEA: let’s take a stand!; Chamber: delay, delay, delay!) threatens to divide the business community on the tax issue even as the Legislature works to see which plan, if any, can get the votes to pass by May.