Nevada Democrats Propose New Business Tax to Support Human Services

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May 11, 2011; Source: Las Vegas Review-Journal | Given the requirement of most states for balanced budgets and no ability to simply print money like the feds, some state legislators are contemplating the unthinkable – though logically imperative – solution of trying to raise more money to support human services program.

In Nevada, Democrats have proposed a 0.8 percent tax on business revenue over $1 million (a “margin tax”), and a 1 percent tax on consumer services (a “service” or “transaction” tax).

The $571 million these two new taxes would raise would save some education and human services from cuts proposed in Governor Brian Sandoval’s budget. Sandoval originally proposed a $5.8 billion budget that he increased to $6.1 billion, but the Democrats think a $7 billion budget would help avoid debilitating human service and education cuts. The new taxes plus the extension of $626 million in some existing taxes that would otherwise expire in July would save the programs at risk.

Drawing a line in the sand, the Republicans and the governor are pledging no new taxes. The Democrats would need a two-thirds majority to get their tax proposals passed, but are unlikely to attract that level of support. It sounds like the state-level standard operating procedure of looming budgetary gridlock, with the social safety net needs of constituents hanging in the balance.—Rick Cohen