Teacher tax battle begins

Although the 2014 election is 16 months away, the battle begun last year over a plan to impose a 2 percent margins tax on business has been joined.

Before we launch ourselves into that debate, however, a few helpful facts:

■ It’s not new. For decades, studies of Nevada’s tax system have suggested that some kind of business tax is needed. In 1966, 1988 and 2002, experts recommended a business levy.

■ It’s been attempted. The late Gov. Kenny Guinn recommended a gross receipts tax to the 2003 Legislature, an idea that was swiftly rejected. Although it’s been proposed since, no proposal has ever been seriously considered.

■ Frustration led to an initiative. After years of talk and fruitless efforts in Carson City, the Nevada State Education Association grew tired of waiting and proposed the 2 percent margins tax. The teachers union collected signatures, fended off legal challenges and won a Supreme Court victory to get the measure on the 2014 ballot.

■ Opposition has begun. The “Protecting Nevada Jobs” PAC — led by the president and the chief lobbyist for the Retail Association of Nevada — has formed expressly “to support an education campaign to defeat [Initiative Petition] 1 of 2014.”

But the retailers aren’t alone: They’ll be joined by the Las Vegas Metro Chamber of Commerce and The Chamber (its Reno-Sparks counterpart), which were instrumental in the unsuccessful legal fight against the proposal.

■ The first objection you’ll hear is disingenuous. Opponents will say making tax policy at the ballot is a bad idea. And that’s generally true — the petition, if adopted, can’t be changed by lawmakers for three years. But the fact is, these naysayers are the same people who opposed all business tax efforts in the Legislature; for them, no business tax will ever be acceptable.

■ The second objection you’ll hear is false. Opponents will claim Nevada will lose jobs if it enacts a business tax. But 47 other states have business taxes of some kind, and none has as high an unemployment rate as Nevada. If taxes were the only factor in the equation, businesses would be fleeing states with taxes to come here. They’re clearly not.

■ The third objection you’ll hear is also false: Prices will rise as businesses pass the cost of the tax to consumers. Studies conducted in 2002 and 2011 showed prices in surrounding states with business taxes are not much higher — and in some cases, lower — than Nevada. We’re not getting a “no tax” discount for offering business a no-revenue-tax environment here, and other states aren’t suffering for imposing taxes.

■ The tax won’t hurt economic development. It is economic development. One of the reasons California — for example — is home to many high-tech businesses is that it has an education system that produces graduates qualified to work for them. In order to get those kinds of businesses here, Nevada’s schools must improve. That means fundamental reforms, but it also means more money. We should consider this tax — and our schools — the primary economic development program in the state.

■ Although the tax has flaws, it’s the only thing we’ve got. Opponents note — correctly — that the initiative cannot guarantee more money for schools. The funds raised by the tax must be deposited in the schools account, but nothing prevents the Legislature from taking money out for other things. And there’s a chance that money-losing businesses might be liable for the tax, although the first $1 million in revenue is exempt.

Those flaws could have been addressed, had opponents been willing to negotiate instead of just talk and run the clock. But they weren’t.

If voters reject this idea, it may be years, if ever, before this opportunity comes again. So it’s important they not be deceived.

Let the campaign begin.

Steve Sebelius is a Las Vegas Review-Journal political columnist and author of the blog SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at (702) 387-5276 or ssebelius@reviewjournal.com.