The tax table is set, now it’s time to start carving

When talking taxes, we often hear about the need for people and businesses to come to the table.

Well, the table is set.

The chairman of the Assembly’s Taxation Committee, Derek Armstrong, R-Henderson, and the Assembly’s Majority Leader, Paul Anderson, R-Las Vegas, introduced the Assembly’s alternative to Gov. Brian Sandoval’s business license fee plan, which would increase the fee based on a company’s gross receipts.

The Armstrong-Anderson Alternative would increase the payroll tax slightly, reduce the standard exemption, eliminate a deduction for health care costs and increase the business license fee from a flat $200 to either $300 or $500, depending on the type of business.

The hearing was a mirror image of the nearly 10-hour reception that greeted Sandoval’s plan. Back in March, a long string of businesses from hospitals to casinos came out to voice support for the governor’s approach in one of the more well-choreographed legislative hearings of the session.

But on Tuesday, most the people who testified against Sandoval’s plan turned out to embrace the Armstrong-Anderson Alternative: The Nevada Trucking Association, the Nevada Manufacturers Association, the Nevada Retail Association, the Nevada Franchised Auto Dealers Association and the Nevada Bankers Association all lent their support to the alternative.

And boy, did the members of the Theoretical Economists Guild who snipe from the margins take some hits!

The payroll tax will cost jobs? No, said the auto dealers and the labor-intensive trucking association, looking back over a decade of data. Taxes will be passed along to the consumer through higher prices? Nope, said the retailers, who noted that competitive pressures often prevent an increase in prices. (That’s supported by a 2003 review by the gambling industry, which found prices in no-corporate-tax Nevada were similar to those in states that imposed corporate taxes.)

But it was the casinos — big fans of the governor’s plan — who delivered the biggest blows against the Armstrong-Anderson Alternative. The Nevada Resort Association, represented by lobbyist Pete Ernaut, said the gambling industry already supplies nearly half the revenue in the state’s general fund, and the state would continue to over-rely on casinos under the Assembly plan. (Under Sandoval’s plan, the tax burden would be spread far more widely among most of the state’s businesses.)

Ernaut said most of the state’s businesses don’t pay the payroll tax, either because they fall under the standard exemption or because they have no employees, and thus no payroll costs, in Nevada. “I would say by any common definition of broad-based, it’s not,” he said.

But the casino industry is not trying to shirk its responsibility, having long embraced the idea of a broad-based business tax. (That’s actually true; the industry pushed for then-Gov. Kenny Guinn’s gross receipts tax in 2003, and is backing Sandoval’s business license fee plan this year. Casinos opposed the Education Initiative, the 2 percent margins tax that was overwhelmingly defeated by voters in 2014, but so did most of the state’s business and labor community.)

So now that the table is set, it’s time to dig in. Democrats refused last week in the Senate Revenue Committee to embrace Sandoval’s tax, saying they were still studying other alternatives (including one by state Sen. Pat Spearman, D-North Las Vegas, a gross receipts tax that does away with the payroll tax entirely).

They’re clearly maneuvering to preserve their legislative relevancy as the session progresses, but there are practical matters, too: What if Sandoval’s plan can’t get out of the Assembly, but a hybrid plan similar to the Armstrong-Anderson Alternative can? What about other components, such as collecting Internet sales taxes or more money from the revised live entertainment tax?

There’s plenty of food on the table. Now, it’s time to start carving things up.

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