Nevada Legislature: Assembly reviews tax plan, takes no action
The Nevada Assembly met as a committee of the whole on Saturday to review the latest amendments to the bill designed to balance Gov. Brian Sandoval’s budget.
But after about three hours of testimony, they deferred action on the bill until Sunday.
When existing revenues from the Modified Business Tax are included, Assembly Bill 464 is designed to generate more than $750 million.
That along with the measure continuing the so-called sunset taxes will produce a total of more than $1.3 billion to balance the $7.4 billion General Fund budget.
To appease at least some opponents, the amended version of AB464 extends protections and exemptions for Nevada’s small businesses, reducing their annual business license fee from $300 back to $200 and exempts the first $4 million of their revenue from the commerce tax.
The original amendment exempted the first $3.5 million in revenue from the commerce tax that has been the most controversial piece of the plan.
Economist Jeremy Aguero told the body somewhere north of 90 percent of businesses in the state will fall under that level and pay no commerce tax. He said the tax is targeted toward large businesses that currently have significant sales and profits in Nevada but few if any employees and, therefore, largely escape taxation under the Modified Business Tax.
As for the license fee, Chief of Staff Mike Willden said the new plan includes a $25 increase in the cost of annual listings by Nevada’s 330,000 businesses. That would generate about $41 million a year, he said.
At the same time, more businesses would pay the Modified Business Tax because the plan reduces the payroll tax exemption from $85,000 a quarter to $50,000 a quarter.
But businesses paying both the MBT payroll tax and a commerce tax based on total revenue would be able to deduct half of their commerce tax payment from what they pay in MBT.
The commerce tax has drawn the most protests from those who argue it is nothing more than a new version of the margins tax that voters rejected last November. Retailers and others who say they have a large total revenue but a very small profit margin argue that they could be put in the red by the tax.
Steve Hill of the Governor’s Office of Economic Development assured Assembly members that the commerce tax, which is based on gross revenues of a company in excess of that $4 million mark, will “in no way” have a negative impact on economic development in the state.
He estimated that a quarter of the commerce tax revenue will come from out of state corporations that currently escape Nevada taxes for the most part.
The plans was opposed by contractors, retailers and a variety of small business organizations.
It was supported by the resort industry, mining, the hospital association and bankers among others.