The plan to tax Nevada businesses' payrolls, approved by the Senate Taxation Committee, was still being revised Saturday as lawmakers tried to work out a deal on how to raise $860 million in new revenue.
The taxation committee approved the measure Friday night with little detail on revenues that the payroll tax would generate and rates needed to adequately fill the state's budget hole.
But with assurances the tax would raise enough revenue, the committee approved a 0.25 percent tax on all salaries up to $21,500 and a 1.29 percent tax on all salaries above that level, while also cutting other taxes.
Taxation Chairman Mike McGinness, R-Fallon, said Saturday fiscal staff adjusted the rates to conform with budget requirements and set rates of 0.7 percent on the lower tier and 1.15 percent above it.
Sam McMullen, a lobbyist for a business group that has promoted several business tax plans other than a gross receipts tax, said the plan is fair to business and easy to institute.
"It taxes everybody on an effective measurement of their ability to run a business and pay wages," McMullen said.
McMullen said Nevada has about $33 billion in gross payroll as a tax base, with more than $19 billion that would be taxable in the lower tier.
The state's gambling and mining industries disagree, however. They say businesses' payroll doesn't indicate their ability to pay and unfairly punishes industries and individual businesses that pay high wages.
"We are a very high-paying industry," said Nevada Mining Association president Russ Fields. "We take care of our employees, and we don't think we should get penalized for that."
Guinn has said he would consider a payroll tax if it isn't used as a substitute for a broad-based business tax, such as his suggested gross receipts or the Unified Business Tax.
Mike Hillerby, the governor's deputy chief of staff, said that because a solidified plan hasn't been adopted in writing, he couldn't comment on the tax.
Greg Ferraro, a key lobbyist for the gambling industry, said payroll taxes wouldn't fit the definition of a broad-based business tax and releases some industries from their responsibility.
"I think this is a tax designed to shield financial institutions from an equal share," Ferraro said.
He said it also punishes labor-intensive businesses and small businesses, while the gross receipts or Unified Business Tax provide exemptions for businesses generating less than $450,000 in revenue.
The bill Senate Taxation amended the plan into is expected to face many amendments in the Senate during a scheduled Sunday floor session.