As the Nevada legislature continues its 2013 session, competing tax proposals are bubbling to the surface, and Nevada businesses are confronted with the question of their tax burden will be rising soon. Will Nevada's vaunted position as one of the most favorable states for taxation be threatened?
Nevada's voters will decide in 2014 whether to enact a 2% margins tax on businesses with more than $1 million in revenues. The bill is backed by the Education Initiative PAC, a Nevada political action committee with backing by teachers unions. The bill, introduced before the legislature as IP 1, did not make it out of committee within the 40 day window for the legislature to act on it. In January 2013, the Nevada Supreme Court rejected a procedural challenge to the initiative. Expect business to rally against the margins tax in the run up to the 2014 election.
Six of Nevada's ten Senate Republicans have proposed a tax on the mining industry as an alternative to the margins tax. Senate Joint Resolution 15 would repeal the constitutional 5% cap on taxes to mining operations. The Nevada Mining Association insists the industry already pays more than its fair share. Proponents suggest that taxing the mining industry could raise hundreds of millions of dollars a year.
Nevada's voters are notoriously anti-taxation. Still, the mining tax seems to have a better chance than the margins tax given the perceived unfairness of the latter to business. SJR 15, the mining tax, would also require voter approval in 2014 if it passes the legislature this year. Someone's taxes may rise in Nevada — but we may not know who will be taxed until returns arrive on November 4, 2014.
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