Tax breaks costing state $3.77 billion

Abatements, exemptions, deductions and other tax breaks in statute cost the state of Nevada $3.77 billion in 2013-2014, according to a report issued on Monday by the Department of Taxation.

The report was mandated by Assembly Bill 466 in the 2013 legislative session in an effort to find out how much those “tax expenditures” are costing the state each year.

“Tax expenditures” as defined in the report include exemptions, abatements, credits, deductions, exclusions and other such things that allow businesses and individuals to pay less.

The report will be presented to both Gov. Brian Sandoval and the Legislature. The report was designed to give the governor and the Legislature a handle on how many exemptions, deductions and other tax breaks the state has in statute, how many people, organizations and businesses benefit from each of them and who those beneficiaries are.

It also includes, for each of the 243 tax breaks in 16 different tax types, how much more revenue the state would generate if each tax was repealed.

According to the report, more than 950,000 Nevadans benefit from abatements totaling $350 million during the two-year period. But business and other exemptions make up the bulk of the tax expenditures — $2.4 billion of the total.

The largest exemptions are in the sales and use tax category since Nevada exempts a wide variety of purchases from that tax including food, prescription medicines and medical supplies. The total there is $895 million for just 2013 with an incomplete reporting of just $53.6 million in 2014 that taxation officials say rise significantly once the year’s reports are all in.

The Net Proceeds of Mines category reduced taxes by a total of $549 million for the two-year period. Property tax breaks account for $1.37 billion because of numerous breaks for businesses, veterans, the elderly and disabled among others on that list of nearly 80 exemptions.

The Real Property Transfer Tax contains exemptions that reduced state revenue by $238.6 million over the two-year cycle, and the Modified Business tax contains breaks totaling $239.8 million. The Insurance Premium Tax adds another $69.5 million in tax reductions.