With the economic devastation from the shutdown causing a huge drop in tax revenues, do you foresee a scenario where Nevada may have to institute a state income tax sometime down the line?
What are the odds? Nevada Independent editor Jon Ralston’s reply was blunt: “Zero.”
As Cindy Creighton, president of the Nevada Taxpayers Association explains, an income tax is presently unconstitutional in the Silver State. (Article 10: "No income tax shall be levied upon the wages or personal income of natural persons.") To amend the constitution would require the issue to be on the ballot in two successive elections and pass both times.
To elaborate, a citizens’ initiative would have to be launched. Can you see Nevadans volunteering to have their income taxed?
Or the legislature would have to pass the amendment, then go to the people not once, but twice, which would be political suicide. “Each process takes approximately five years,” says Las Vegas Review-Journal political columnist Steve Sebelius. “Given the political mood of the state, I doubt any income tax would pass, either via the people or legislature.
“This, by the way, is the same issue that arises with lotteries, which are banned,” Sebelius adds. (So much for that other revenue fix.)
What about raising other taxes? “That would certainly be something that would go before the legislators for them to consider. The governor sets the special session and he would also set the agenda,” Creighton says. “That really does go back to our leaders: what they might consider to take care of the shortfall. We have a rainy-day fund. We have federal stimulus money. And there are lots of alternatives before we get to talking about raising taxes.”
“Few other taxes can be raised to make up for what's surely going to be a sizable budget deficit,” Sebelius contends. “Sales tax is already high in Clark County and any increase (such as that proposed by the Clark County Education Association, i.e. the teachers union to the Local Schools Support Tax, a component of the sales tax) would put Clark among the highest sales-tax jurisdictions in the country. Gaming taxes (another teachers’ union target) do not generate the revenue they used to, but are one area that could see an increase. The commerce tax rate could be adjusted (or the floor lowered) to capture more business revenue. Surely, the entire rainy-day fund will be diverted to balance the state budget. Those are the easy things.”
Currently, the Nevada Resort Association and Clark County Education Association are wrangling over the latter’s petition drive to raise the gaming-revenue tax from 6.75% to 9.75% (a whopping 44% increase). This would deprive Nevada of its status as the state with the lowest gaming tax in the nation, an honor that would then go to New Jersey. While the petition creates the impression the increased tax revenue would go toward education, schools probably wouldn’t see a dime of it, as it would actually go directly into the General Fund.
From Sebelius’ perspective, such a tax — even if passed — would be a drop in the bucket. He says, “The greater likelihood is that services will be cut. I predict state-employee hiring freezes, involuntary furloughs, and even layoffs. Ditto for local government. There's just not a lot of room to maneuver otherwise.”
At present, the Nevada state budget relies on sales taxes (29%), gambling taxes (17.5%, but as mentioned, a diminishing source of revenue), and entertainment taxes (3%). It is, as Sebelius has said elsewhere, “a model designed to fail in bad times.”
But no matter how bad those times get, we agree with Ralston: Neither the people nor the legislature has any incentive to try to amend the state constitution to impose an income tax on themselves.
Other half: Personal Property tax; Real Estate tax; utilities--water, gas, electric, waste management (trash collection--ours is in with the water bill); cable ("fees"); tons of city/county taxes or "fees" on every breath we take, some of which go to the "state." JMHO.