Don’t look to Congress as a mentor on taxes
June 4, 2003
Compromise: “making a settlement by each side giving up part of its demands.”
It is a fact that legislation is the art of compromise, but sometimes the result looks nothing like art.
For the most part, in this year’s legislative session, compromise has worked to address the systemic weaknesses in Nevada’s tax structure. Under the leadership of Gov. Kenny Guinn, Sen. Bill Raggio and Speaker Richard Perkins, agreement was forged on many elements of a tax package to raise the funds needed to pay for education, social services, and the business of government.
But on Monday, at the bitter end of the 120-day session, with a two-thirds vote needed to pass a tax package, a small minority balked at supporting the Unified Business Tax, considered to be a more equitable version of a gross-receipts tax.
From the state of the state in January until now, Gov. Guinn has been steadfast in his resolve not to “balance this budget on the backs of our children, senior citizens, and the poor.” This is in sharp contrast to other states in fiscal crisis where slashing is considered to be a solution.
Most elements of the proposed Nevada tax package have broad bipartisan legislative support including additional taxes on cigarettes, alcohol, entertainment and even gaming. The controversial tax on business has been the sticking point.
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The legislature is still stuck, called back into special session on Tuesday by Gov. Guinn to resolve the tax bill and the funding of education.
As usual, the legislators wrangled to the very end of the session. Tax measures require two-thirds of both houses for passage. Some legislators balked at supporting a tax package that would do more than fund education and services at existing levels. No agreement was reached before the regular session ended.
It’s easy to condemn our legislators for not working hard enough, soon enough, to reach a compromise before the end of the 120-day deadline.
But look at the example they have at the national level.
Congress just passed, and the president has already signed, a tax bill designed to stimulate the economy by lowering taxes. (Apparently, deficit spending is not a problem at the national level.) A key provision was increasing the child credit for low- to middle-income families. But in the conference committee, the $400-a-child tax credit was eliminated for families with incomes from $10,500 to $26,625.
This savings equaled just 1 percent of the total tax bill, and enabled the conference committee to come to agreement without having to tweak tax reductions in dividends or the already-reduced tax rate for the wealthiest Americans.
The child tax credit cut came as a surprise to the sponsor of the provision, Sen. Blanche Lincoln, who was not included in conference committee. According to the New York Times, the Arkansas Democrat said, “These are the people who need it the most and who will spend it the most. These are the people who buy the blue jeans and the detergent and who will stimulate the economy with their spending.”
Congressional leaders defended the action by arguing that the tax-cut bill is really about creating jobs; a child tax credit for those who need it the most only helps them to spend, not create jobs.
The Bush administration has defended the compromise, saying that the tax bill was designed to provide relief to those who pay taxes (the rich), not those who are too poor to pay (the working poor.)
The similarity between Congress and the Nevada Legislature is that risky, last-minute, closed-door deals are an accepted part of the law-making process. Compromise can ensure that everyone (at the table) gets something. But compromise can result in laws which are not fair and solutions which are unworkable especially for the people not at the table.
When the deals are done and legislators finally go home, Nevada voters should hold lawmakers accountable for the consequences of decisions made in haste, as well as acknowledge their accomplishments during the legislative session.
Abby Johnson consults on rural community development, public involvement and nuclear waste issues. She is married, lives in Carson City, and has one high school-aged child.