The Margin Tax a Hot Potato for Democrats

— by Rich Dunn, NVRDC 2nd Vice Chair

Last week Nevada Appeal columnist Bo Statham presented the progressive case against this year’s education initiative, an issue that’s dividing Democrats in a year when party unity has never been more important.

Those divisions were plain to see at January’s state central committee meeting, where a resolution supporting the initiative passed 92-78 overall, but was voted down in the north by a 51-3 margin after members heard from construction union representatives that the proposed law would cost jobs in their industry. In the south, a large turnout of teachers put reform of education funding top of mind, so the resolution passed.

All Democrats I know agree that Nevada needs a higher level of funding for public education, unlike many Republicans, who want to divert existing public funding from district schools to private and charter schools. But this is a question of priorities, and the only way to get this state’s priorities straight is to elect more Democrats.

That’s something about which we should all be able to agree, yet in 2010, when we had a chance to elect a governor who made education his top priority, we didn’t see the level of commitment needed to make it happen. Instead we ended up with a Republican governor who allows his party’s tax aversion to trump adequate education funding. Sadly, it appears that our party is now giving him a pass for reelection, which brings to mind the oft-repeated political adage: Elections have consequences.

Margin tax not the answer for state education

— by Bo Statham

The Education Initiative, better known as the Gross Margin Tax proposal, will be on the 2014 ballot for voter consideration. Supported passionately by those who believe Nevada’s public school system requires higher funding, the tax would raise an estimated $800 million a year dedicated to that purpose. The business community vigorously opposes the proposed tax.

This column will not please either supporters or opponents. Instead, it focuses on the need to restructure Nevada’s tax system to more equitably provide required funding for all public needs.

It seems beyond question that K-12 education is in need of greater financial resources, but a gross margin tax on a segment of the business sector would be neither fair nor a good component of Nevada fiscal policy.

Sponsored by the Education Initiative Political Action Committee, formed primarily by teachers and school groups, the margin tax would be a new levy of 2 percent on businesses with annual incomes of at least $1 million. Gaming revenue is exempt. A company could deduct from total income certain expenses or alternatively chose to deduct 30 percent of total income, whichever results in a lower tax.

It is important to understand this would not be an income tax, which is based on a company’s profit. The proposed margin tax would be assessed even if a company made no profit.

The Nevada Policy Research Institute described the margin tax as “one of the most hare-brained schemes ever to come before state lawmakers.” The independent Tax Foundation calls gross-receipts taxes “distortive and destructive.”

Underlying opposition to the tax is the fear it will make Nevada less competitive. But let’s look at the facts.

The Tax Foundation ranks Nevada, one of nine states without corporate and personal income tax, third overall in its 2014 Business Tax Climate index but 36th in Best States for Business and Careers. Forbes concludes, “While Nevada scores well in business costs, it does not score well in factors such as labor supply, economic climate, and quality of life.” CNBC’s 2013 business ratings found Nevada ranked “well in business friendliness and cost of living, but did not rank well in areas such as the economy and education.”

A fair interpretation of these ratings is that Nevada’s fiscal policy results in a very attractive tax burden for businesses and residents but a poor environment for economic development. The state fails to foster skilled labor, education, economic climate and quality of life that are valued by business.

According to a 2011 U.S. Census Bureau report, Nevada’s state revenue per capita of $3,848 was the second-lowest of all states, and state spending per capita of $4,848 was the fourth-lowest. This “low taxes-low public funding” tradition reflects an anti-government mentality that does not serve Nevada well.

Increased financial support is one vital component of improving public education in Nevada, but a gross margin tax is not the way to fund it. The proposed tax would only add to an already-failed fiscal policy that is misguided, inequitable and regressive.

Bo Statham is a retired lawyer, congressional aide and businessman. He lives in Gardnerville and can be reached at bostatham@me.com.

State-by-State Reports: The Economic Benefits of Fixing Our Broken Immigration System

— by Megan Slack, August 01, 2013

America has always been a nation of immigrants, and throughout the nation’s history, immigrants from around the globe have kept our workforce vibrant, our businesses on the cutting edge, and helped to build the greatest economic engine in the world. But our nation’s immigration system is broken and has not kept pace with changing times. Today, too many employers game the system by hiring undocumented workers and there are 11 million people living and working in the shadow economy. Neither is good for the U.S. economy or American  families.

Commonsense immigration reform will strengthen the U.S. economy and create jobs. Independent studies affirm that commonsense immigration reform will increase economic growth by adding more high-demand workers to the labor force, increasing capital investment and overall productivity, and leading to greater numbers of entrepreneurs starting companies in the U.S.

Economists, business leaders, and American workers agree –  and it’s why a bipartisan, diverse coalition of stakeholders have come together to urge Congress to act now to fix the broken immigration system in a way that requires responsibility from everyone —both from unauthorized workers and from those who hire them—and guarantees that everyone is playing by the same rules. The Senate recently passed a bipartisan, commonsense immigration reform bill would do just that – and it’s time for the House of Representations to join them in taking action to make sure that commonsense immigration reform becomes a reality as soon as possible.

In addition to giving a significant boost to our national economy, commonsense immigration reform will also generate important economic benefits in each state, from increasing workers’ wages and generating new tax revenue to strengthening the local industries that are the backbone of states’ economies. The new state by state reports below detail how just how immigration reform would strengthen the economy and create jobs all regions of our country.

We must take advantage of this historic opportunity to fix our broken immigration system in a comprehensive way. At stake is a stronger, more dynamic, and faster growing economy that will foster job creation, higher productivity and wages, and entrepreneurship.

STATE REPORTS

Alabama Alaska Arizona Arkansas
California Colorado Connecticut Delaware
Florida Georgia Hawaii  
Idaho Illinois Indiana Iowa
Kansas Kentucky Louisiana Maine
Maryland Massachusetts Michigan Minnesota
Mississippi Missouri Montana Nebraska
Nevada New Hampshire New Jersey New Mexico
New York North Carolina North Dakota Ohio
Oklahoma Oregon Pennsylvania Rhode Island
South Carolina South Dakota Tennessee Texas
Utah Vermont Virginia Washington
West Virginia Wisconsin Wyoming  

Reprinted from The White House Blog.  For more information:

An Endangered Species Up in Arms

The number of students taking humanities courses is plummeting, and financing for liberal arts education is being tea-partied to death.

— by Donald Kaul

Donald Kaul

As many of you already have intuited, I don’t know everything. Nobody does, I suppose. More importantly, I don’t know everything about anything.

I’m what used to be called “a generalist,” someone whose knowledge in any direction is a mile wide and a quarter-inch deep.

Sad to say, we generalists are an endangered species.

Everywhere, the pressure is on young people to specialize. They’re also being urged to concentrate on the so-called STEM subjects: science, technology, engineering, and math. Why? These are disciplines that can predictably get you a job upon graduating from college.

A Florida task force last year went so far as to suggest that college courses in the humanities — literature, history, the social sciences, the arts — be made more expensive than STEM courses just to steer students away from them.

Kaul-Humanities-tom.belteThis idea has the humanities people up in arms.

Duke University President Richard Brodhead headed a study group of educators, business leaders, artists, and politicians that recently delivered a report to Congress decrying the attitude that studying the humanities and social sciences is a waste of time.

“This facile negativism forgets that many of the country’s most successful and creative people had exactly this kind of education,” he said.

The report comes at a time not when hordes of students are crowding into “wasteful” humanities classes, but rather when attendance in them is plummeting and financing for liberal arts education is being tea-partied to death.

Our higher education system is forgetting what education is supposed to do in the first place.

I entered college as an engineering student — a mistake on the order of Napoleon’s decision to invade Russia. I was lucky though. I made a last-minute escape to the English department where I was not only allowed to read novels for fun but also find out about things I was actually interested in — history, psychology, architecture, and the arts.

I hasten to add that I had no idea what I was going to do with this information. Neither did my father, a tool and die maker who wanted me to join one of the more practical professions — preferably dentistry. He wanted me to make a living without being in danger of killing someone.

That didn’t appeal to me either. Like many students (particularly English majors) of the 1950s, I wasn’t going to school merely to learn a trade. I was out to become an educated person — well-read, witty, sophisticated — like someone in a Noel Coward play.

Unfortunately, Coward never tells you how his people earn a living. When I graduated with my English degree firmly in hand I had no answer for my father’s question: “What now, bigshot?”

Thus, I drifted into journalism. It wasn’t an unfamiliar story in the newspaper business of the time. Back then, it served as a refuge for failed novelists, playwrights, and other flotsam bearing a liberal education.

The thing is, it worked out fine for me. I led an interesting life, had a lot of fun, and earned enough to raise a family in modest comfort. Moreover, at one time or another, I pretty much put to use everything I had learned in college.

And that’s my point — a point these STEM people miss — there’s nothing wrong with learning for its own sake. Knowledge doesn’t go to waste. It comes in handy somewhere along the line, sometimes in the most unlikely places.

I realize that the world now is a very different place from the one I grew up in. Back then, you didn’t have to be a hedge fund manager to work your way through school for one thing. But another difference is that workers today change jobs, even professions, four, five, or six times during their working lives.

Specialists who know only one thing might be left out in the cold when circumstances change. Generalists have the intellectual tools to adapt.

Actually, we’d be better off if more of our politicians had read a few more good novels. Or if perhaps they’d written a poem or two.

Knowing something is always better than knowing nothing.


OtherWords columnist Donald Kaul lives in Ann Arbor, Michigan. OtherWords.org  Photo credit to Tom Belte/Flickr

Giving Away the Store

The whole business of giving tax breaks to businesses to lure them to a particular place is largely a scam.

By William A. Collins

William A. Collins

Sure, I’ll move
My business here;
Whisper tax breaks,
In my ear.

There’s a certain political irony surrounding WWE, that unrivaled producer of violence and misogyny for fun and profit. As a significant employer with 700 workers here in otherwise dowdy Connecticut, the outfit formerly known as Worldwide Wrestling Entertainment has already collected $37 million in state tax credits, with more in the pipeline.

This state largesse has added mightily to the company’s profits, nearly $100 million of which funded two losing U.S. Senate campaigns by its former CEO, Linda McMahon. In her failed 2010 and 2012 bids to become a lawmaker, by the way, she claimed to oppose corporate welfare.

Other tycoons are more honest. Throughout our nation, savvy businesses snooker grants, tax credits, exemptions, forgivable loans, free buildings, subsidized training, and other perks from gullible states and cities. Those governments think that without these gifts employers would move elsewhere. Well, sometimes that’s true, but mostly not. The whole business of giving tax breaks to businesses to lure them to a particular place is largely a scam.

The obvious overriding flaw in this bribery system is that if Town A gains a new business from such giveaways, Towns B, C, and D lose out. It’s a zero-sum game. Overall, the company profits while society pays. Recently the Bridgewater hedge fund wheedled a deal from Connecticut’s government to pay it some $100 million to build its new corporate headquarters in Stamford, three towns down the coast from where it is now. Where else was it going to go, Bangladesh?

CitizenUnitedImage_3

No, Bridgewater needs to be near Wall Street. So, OK, maybe it could move to New Jersey or New York. What we plainly need is not this ongoing bribery competition, but an interstate compact or a federal law making it illegal to subsidize employers to settle in a particular town or state. Let them settle wherever they otherwise think is best, using their own money.

Worse still, some of the biggest bribes nationally go to large corporations to relocate from the North to the South so they can replace their unionized workforce with non-union workers. Not only do these factories collect subsidies to move, but they’re also getting taxpayer dollars to make it easier for them to chisel away at their workers’ security.

The cure for this abuse is federal legislation giving workers equal rights to organize anywhere in the country. It would also help if Uncle Sam could prohibit the use of public money to corrupt the process of selecting a site to locate a factory or corporate headquarters.

There’s probably no way to end our basic inter-town and interstate competition for jobs and tax revenue, but it could be made a lot more beneficial. The idea would be to steer this battle for tax base into healthier channels.

Suppose, for example, that cities competed on the basis of the quality of their schools, or the efficiency of their transit, or the beauty of their parks, or the diversity of their housing? Such public services improve the well-being of citizens and employers alike.

As it is, unfortunately, today’s competition is notably less elegant than that. One “family fun center” in Norwalk, my hometown, just received a grant to upgrade its laser tag equipment. Upstate, an entrepreneur recently collected $100,000 in state funding to create new paintball battlefields. Instead of being tarred and feathered, maybe the officials who granted these giveaways should be lasered and paint-balled.

OtherWords columnist William A. Collins is a former state representative and a former mayor of Norwalk, Connecticut.  Distributed by OtherWords.org

State of the State: Rebuttal

Hello, I am Sen. Mo Denis, majority leader of the Nevada State Senate.

I appreciate the opportunity to give the response to Gov. Sandoval’s State of the State speech.

On behalf of Speaker (Marilyn) Kirkpatrick and myself, I wish to welcome the new members of the Nevada Legislature. This upcoming session will include one of the biggest changes to our Legislature in the history of our state.

We thank the new members for committing their skills and time to our citizen Legislature.

Additionally, we wish to thank Gov. Sandoval for his open-door policy as Speaker Kirkpatrick and I transition as the new leaders of the Nevada Legislature.

We agree with the governor on many issues, and we share his deep concern for the well-being of Nevada’s citizens. We are thankful for his integrity and commitment to working together to solve our problems.

This year we lost two stalwarts from our Legislature. Assemblywoman Gene Segerblom passed away recently, and earlier this year we lost Sen. Bill Raggio. I am humbled and honored to serve in his footsteps, and will work hard to continue Sen. Raggio’s legacy of fighting for Nevadans. We will miss Gene and Bill terribly.

I also want to take a moment to thank the many brave members of our Armed Services. I’m proud Nevada is home to so many world-class military institutions like Nellis Air Force Base and Fallon Naval Air Station. I also wish to thank the members of our Legislature who have served in our Armed Forces.

As Nevadans, we share a common desire to make our lives better for ourselves and for our families and neighbors. We have struggled together; yet continue to help one another, as we strive to achieve the American dream.

Like many of my fellow citizen legislators, I never planned on becoming a public servant. In fact, I am the son of Cuban immigrants who came to this great land of opportunity to better provide for their family.

My parents instilled in me a great love for this great country but also for this wonderful state. I serve because I feel a debt for all the marvelous blessings that have been given to my family and me.

As a father, I became involved in my community after my first child was born. My early involvement included working with the PTA, where I first met Speaker Kirkpatrick, who was also involved in the PTA.

We both had the opportunity to meet with parents, teachers and business leaders who wanted to make things better for our children; we wanted to help transform our education system. The biggest concern amongst parents then, as it is now, is the education of our children.

During the 2011 session, Gov. Sandoval proposed significant amounts of cuts to our schools. This year he is promising the world, but his policies won’t change our schools soon enough.

His plan fails at providing immediate relief to our middle-class families.

A quality education and paying their fair share are two of the biggest issues facing our middle class, and yet our schools are not providing the tools our children need to succeed and the middle class are asked to pay more than their fair share to support our state’s budget.

What’s worse, with very little new revenue, we don’t know how the governor plans to pay for these expenditures while cutting taxes. Let me be clear, the governor is proposing to cut taxes on 2,700 businesses in the state while raising the sales tax on middle-class families.

We disagree with this approach. It places more of the burden on middle-class families while giving businesses even more generous tax breaks.

Tonight, we also heard from the governor about the graduating class of 2023.

What about the graduating class of 2015?

Middle-class families need immediate relief, not long-term promises. The governor’s budget isn’t going to help kids like my son, who’s forced to sit in a crowded classroom, where his teacher is dividing her attention between 35 students.

Also, our schools need to be fully funded before we start subsidizing private schools.

While we agree with the governor that it is irresponsible to just throw money at our schools and hope for the best, we must make a bigger investment in our children’s futures by implementing educational policies and programs that have proven to improve students’ proficiency and graduation rates today and not just kick the can down the road for two more years.

Since 1990, our graduation rates have dropped 20.7 percent. Our students rank below the national average for proficiency in reading and math and below regional states.

We have seen tremendous gains in proficiencies over the last few years but we have a long way to go. Some students in Clark County high schools are sitting on the floor because of excessive class sizes.

Gov. Sandoval’s proposed “modest” increase in education spending from last year is not sufficient to make up the hundreds of millions of cuts that have been made over the last four years. This is unacceptable, not just to our current students but to the future of our state.

Democrats in the Assembly and Senate are proposing a series of policies that have proven to effectively improve our educational system. We are proposing the following:

1. Implement a pre-K system for all at-risk students.

2. Fund a full-day kindergarten in all public schools.

3. Smaller class sizes.

4. End social promotion before the third grade.

5. Change the K-12 funding formula.

These proposals are common-sense solutions that need to be implemented now and not phased in over several years. Our students, our families and our businesses have waited long enough.

We are committed to continuing to work with the governor and our colleagues in both houses and parties to build a better Nevada. It is the fair thing to do for our students and for our middle-class families.

Improving our schools is key to creating new jobs right in Nevada. All Nevadans win when our kids succeed. Schools are the incubators that will help bring the high-tech and biotech jobs of the future.

In 2011, the governor stated that he doesn’t believe it is government’s responsibility to create jobs. We agree, it is government’s responsibility to create an environment in which jobs and businesses flourish.

We are told that taxes are too high and thus, stifle job growth. I agree, taxes are too high on the middle-class and poor. Yet, other states in the Western United States have higher tax rates and have seen larger job growth.

Last year, Nevada created less than 20,000 new jobs.

By comparison, Utah created 41,000 jobs, California created almost 400,000, Arizona nearly 53,000 and almost 54,000 new jobs were created in Colorado.

Again, it goes back to education. Job creators see the quality of the schools in those states and have chosen to relocate there. To maintain our status quo and only invest a modest amount more in education is troubling, given what other states are doing.

Nevada will continue to fail its residents if we don’t compete in our investment in education and economic development. Too many Nevadans are still unemployed and too many homes are still being foreclosed upon.

Democrats and Republicans must move beyond political rhetoric aimed at winning the next election and instead think outside of the box in order to create more jobs and growth here in Nevada. We must work together to find solutions.

Better schools grow and bring better jobs. There is no getting around this fact. High-tech, engineering, computer science and biotech industries are the good-paying jobs of the future that require a world-class education, and there is no reason we should shrink from that challenge.

I join my colleagues in the Assembly in saying we must create short-term solutions and create a long-term vision for economic development in Nevada.

Our colleagues in the Assembly Democratic caucus released their jobs plan, “Nevada Jobs First,” and I will be working with them to pass these common-sense proposals, aimed at providing immediate relief to our working families.

• They have proposed giving contractor-bidding preferences as long as their materials and workers come from Nevada.

• We can also work to team up business with the state’s higher education system and invest in programs that train the types of workers our Economic Development office has determined we need.

While Nevada remains one of the great tourist destinations in the world, we can no longer expect to sustain a vibrant future by asking resorts to provide all the jobs and revenue for our state. It is irresponsible to do so.

A strong health care system also creates a good environment for job growth, and we applaud the governor’s decision to expand Medicaid in Nevada, under President (Barack) Obama’s Affordable Care Act.

The Silver State Exchange will help improve the lives of the disadvantaged, and we commend the governor on his leadership in moving this forward.

We also need to ensure we have a dedicated public workforce — and while we applaud the governor’s proposed reductions in furloughs, it restores less than one-fourth of their pay and benefits. We can’t continue to ask our employees to do more with less, or else we risk our ability to recruit and retain our valuable public employees.

One of our greatest responsibilities as a society is to protect our most vulnerable.

Yet, the governor’s policies have been devastating to families with children with autism or mental and physical disabilities. Senior citizens have seen their services cut as well.

We cannot provide the services necessary for our vulnerable populations if we do not adequately fund social services.

Again, middle-class families were hurt by these cuts and will continue to suffer. Middle-class families rely on these social services to help their special-needs children, to help their parents as they age and to assist our veterans as they transition to civilian life.

Additionally, we must make a greater effort increasing our standard of ethics for political candidates and elected officials. We will work together with Republicans to create solutions and restore citizens’ trust in their government.

Tonight you have heard many ideas about what we would like to see done differently here in Nevada. Throughout the legislative session, Speaker Kirkpatrick and I will be introducing a series of proposals designed to “Build a Better Nevada.”

Our goal is to introduce common-sense solutions to our many problems. We hope the governor and our Republican colleagues can join us in supporting our policies of investing in education, economic development, funding of social services and ethics reform.

But we cannot implement these plans on the backs of the middle class.

Nor can we ask tourists and our resort industry to pay more for these investments.

We cannot ask our small businesses to stretch resources any further.

Tough choices will have to be made over the next several months and we hope our colleagues will forgo political rhetoric and support policies that move Nevada forward.

The Assembly and state Senate received a mandate this year from the public. The public is tired of the policies and politics of the past and want to see increased investment in our schools and new policies that promote economic development.

My family moved to Nevada when I was young because this was the land of opportunity. Anyone could move here and find a good job to provide for their family. Nevada became home to immigrants from other countries and also, from other parts of our great nation. Nevada became home to hundreds of thousands who wanted a new life.

We must continue to work toward making Nevada the state of opportunity. In the last decade, thousands flocked here in hopes of a better life and it is incumbent upon us to provide their families with the ability to achieve their dreams.

We must begin today toward building a better Nevada, so that our families and children can once again view this great state as a land of opportunity.

Thank you for your time and may God continue to bless the great state of Nevada.