State Senate’s leader drops 2010’s call for corporate income tax

Senate Majority Leader Steven Horsford said Monday he no longer favors imposing a corporate income tax in Nevada, a sharp turnaround from a year ago when he railed in the Legislature against companies for not "paying their fair share."

"I've gone full circle," Horsford acknowledged in an interview with the editorial board of the Las Vegas Review-Journal.

Horsford, D-Las Vegas, said he used to think that Nevada was ripe for a corporate income tax because it's one of only five states that does not have one. Republicans argue that helps attract business. Horsford said he now thinks such a levy would be difficult to impose and collect and wouldn't go far enough in reforming what he called a regressive tax system.

"I thought, 'Well, damn, if it's good enough for the others, why can't we (have the tax),' " he said. "But then I looked at it and I realized, you know what, it's not better than other broad-based solutions. And it doesn't really produce a real good yield. And it's pretty complicated to apply. And unless you build a state apparatus to collect it, it's not really easy."

Horsford's change of heart comes after he and other Democratic leaders spent the past year meeting privately with industry and casino lobbyists and executives in preparation for the 2011 legislative session, now in its fourth week.

His stance is in contrast to his position in a special session held last year to find nearly $900 million in revenue to fill a budget gap. He delivered an impassioned floor speech on Feb. 27, 2010, saying corporations were getting a free ride.

"The question simply is, why aren't corporations paying their fair share?" Horsford said in the speech. "The question is why should the state subsidize your cost of doing business?"

The gaming industry, which is heavily taxed, and sales tax collections now account for nearly two-thirds of the revenue the state collects. Horsford said Monday that those sources are too volatile for Nevada to continue to rely on so much.

Horsford refused to back any specific tax alternatives, saying all ideas should be on the table to avoid the deep cuts to education and health and human services under GOP Gov. Brian Sandoval's proposed $5.8 billion budget.

Horsford said he agrees cuts must be made, but he also wants to raise more revenue to fill what he sees as a $2.5 billion shortfall.

Pushed for specifics, Horsford said Monday it was too soon for Democrats to put forth a plan to raise revenue, but he said any new taxes should be fair and equitable and not hit the poor, which higher sales taxes on goods would.

Horsford said he would consider a new sales tax on the $100 billion in services sold each year in Nevada.

The Las Vegas Chamber of Commerce argues the tax could target services relied upon by businesses and individuals with higher incomes, such as accounting and legal services. Depending on how it's structured, a sales tax on services could raise $500 million a year, supporters have said.

"I don't know if I completely buy into that," Horsford said. "That would be something that I would want to evaluate and understand before I made a final evaluation."

Contact Laura Myers at lmyers@reviewjournal.com or 702-387-2919.