Another blow aimed at Nevada business

Nevada need only look to the west to understand why AB543 is a bad idea and will hurt insurers and businesses.

Officially, AB543 eliminates a tax exemption for insurers offering workers compensation policies in Nevada. The state says it will raise state tax revenue by $12 million.

Assemblyman David Goldwater says there haven't been any complaints from out-of-state companies writing workers compensation insurance about losing the exemption. We wonder how many of them he called. We think the whole thing starts Nevada down the road of workers compensation disaster in a manner similar to our neighbor to the west.

Why does the state delude itself into thinking that insurance companies will just silently cough up the money from their profits, leaving no impact on Nevada businesses? Are they naive? Does the state somehow think this will create a healthier workers compensation environment for injured workers or for Nevada companies?

The higher taxes will be slammed to local business insurance rates at a time (now narrowing) when Nevada companies are using our lower cost structure (now narrowing) to attract business from other states. Insurance companies may see this is an opportunity to abandon Nevada (remember the medical insurance crisis?), leaving less competition and higher rates. Higher rates mean less pay for fewer employees. Those endorsing this bill should call a few of these "silent" insurance companies and ask how they feel about it. They might even ask if the insurance companies plan to simply pay the tax and not pass on the cost to Nevada business, just because they're just nice people.

The California crisis is now so bad (actually, it's been bad for years, but 2003 rate increases of 50 percent to some have caused many more companies to plan their defections elsewhere), the state legislature might actually do something about it. We doubt it, if past behavior is a guide.

Our leaders in the state Legislature should run for the shredder with AB543. Insurers will bolt, companies once interested in moving to Nevada will pass us by, and companies here will start fishing for better waters. Between California and Nevada, we may even start a great eastern migration.