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.

The Swinging Electorate

Despite formidable efforts to disenfranchise African Americans in 2012, a larger percentage of black voters than white voters turned out at the polls to assure Obama’s victory on Election Day.

Marc MorialBy 

It’s official: African Americans are the nation’s most important swing state.

Last summer, I predicted that the African American vote would tip the scales in the 2012 election of Barack Obama. My organization, the National Urban League, foresaw a continuation of a trend that proved to be a decisive factor in Obama’s 2008 campaign.

The Census Bureau has now confirmed our analysis. Not only did the 2012 black vote make the difference in several key swing states, including Florida, Pennsylvania, Virginia and the biggest prize of all, Ohio, but black voters turned out a higher rate than white voters.

Since 1996, black voter turnout rates have risen 13 percentage points, and the number of blacks who voted in 2012 rose by about 1.7 million over 2008. This is even more remarkable given that overall voting among eligible citizens declined last year.

This boost in turnout also demonstrates that, in the face of a widespread voter suppression campaign, a record number of blacks heeded the National Urban League’s call to “Occupy the Vote” — a campaign that reached 10 million people through traditional and social media, phone banking, and grassroots and community outreach. In fact, all Census divisions where voting rates of blacks exceeded those of whites included states that introduced major voter suppression tactics in the year leading up to the election.

While the National Urban League doesn’t endorse individual candidates, we do encourage civic engagement, and our affiliates have always played leading roles in voter registration drives. That’s why we are also pleased that African Americans registered in record numbers last year. The registration rate for blacks rose from 69.7 percent in 2008 to 73.1 percent in 2012 — the highest registration rate ever recorded.

In Ohio, where Obama won 96 percent of the African-American vote, the black registration rate was 74.4 percent. In North Carolina, a state he lost this time around, African-American registration increased from 71 percent in 2008 to 85 percent in 2012 with 80.2 percent of eligible black voters going to the polls, up from 68.1 percent four years ago.

The increase in black voter participation is a turning point for several reasons.

First, it’s clear that Mitt Romney would have eked out a victory in 2012 if voters had turned out at 2004 levels. White turnout was higher and black turnout was lower in that presidential election.

Second, due to an increase in overall minority voting, people of color will be wielding even more electoral clout in the coming years. According to the demographer William Frey, “by 2024, their vote will be essential to victory.”

Third, this demographic shift is prodding both major political parties to increase their outreach and appeal to minority voters and to reassess the impact their policies are having on those communities.

As the Associated Press put it, “The findings represent a tipping point for blacks, who for much of American history were disenfranchised and then effectively barred from voting until the passage of the Voting Rights Act in 1965.”

There’s no doubt that the opportunity to re-elect America’s first black president contributed to record black turnout last year. But, no matter who is on the ballot in 2014 and 2016, we must continue to exercise our voice and Occupy the Vote.


Marc Morial is the president and CEO of the National Urban League and the former mayor of New Orleans. http://www.nul.org
Distributed via OtherWords (OtherWords.org)