Tax plan reaction mixed

Is the state Legislature's tax proposal an assault on the working class or a reasonable compromise that meets several important goals?

It depends on whom you ask.

Gaming executives, social-services advocates, citizens' watchdogs and business owners all weighed in on the Legislature's plan Wednesday with varying degrees of approval or disapproval.

Put Alan Feldman, senior vice president of public affairs for gaming giant MGM Mirage, in the reasonable-compromise camp.

MGM Mirage officials wanted a tax plan to include three elements: tightened government belts, protection of education and reform of retirement benefits for state workers.

Feldman said he was pleased with the progress in all three areas. Legislators pared roughly $1 billion from an earlier spending proposal. They reduced planned cuts to education. And they're considering a bill to require public workers to spend more years on the job before full retirement benefits kick in.

"Is it perfect? I don't think there's any such thing as perfect, and there is additional work to be done," Feldman said. "But it's clear the Legislature has gone an incredibly long way down the road toward achieving those objectives."

But Bob Fulkerson, executive director of advocacy nonprofit Progressive Leadership Alliance of Nevada, was underwhelmed.

Thanks partly to a 6.5 percent state sales tax and a 7.75 percent sales levy in Clark County, Nevada already claims one of the nation's most regressive tax systems, Fulkerson said. Goosing the sales tax rate by the 0.35 of a percentage point lawmakers proposed is a "gut punch to low-income people in our state," he said.

Fulkerson said he was especially disappointed that mining companies dodged new taxes.

"Right now, their contribution to the (revenue) pie chart doesn't even show up. It's a tiny, little sliver," he said. "In this package, businesses and mining are only going to have to pay 1.2 percent in (payroll tax). On a $1 million payroll, that's $12,000. Most of them pay more than that in copying expenses."

Fulkerson was so frustrated with Tuesday's outcome that he said he's sending out feelers to other groups to gauge their appetite for future ballot questions on imposing higher mining taxes and a corporate-income levy.

Carole Vilardo is looking toward the future, too, and she said she's worried about what she sees. Vilardo, president of government-waste watchdog group Nevada Taxpayers Association, said legislators did nothing to avert the budget shortfalls of tomorrow.

A large chunk of revenue lawmakers are counting on in this budget comes from federal stimulus spending, Vilardo noted. Increasing the budget based on one-time cash infusions sets Nevada up for additional revenue crunches in the legislative session two years from now, when those sources have vanished.

"People talk about how unstable our tax base is. Yet, during good times, our taxes have performed outstandingly," Vilardo said. "They have given us double-digit increases. But we have managed to spend all of those double-digit increases. The thing that hasn't been stable has been our level of spending. We have not put away, in my opinion, what we should."

One local business was so concerned about the tax plan that its executives marshalled its clients to launch an e-mail campaign.

Incorp Services, a Henderson business that helps companies incorporate in Nevada, asked its clients to write to legislators about the increase in business license fees, which would double from $100 to $200 a year. They responded by the hundreds, writing to lawmakers and to the Review-Journal to note that they incorporated here for the Silver State's low corporate fees, but they'd consider moving their limited liability corporations to other states if Nevada's filing costs rose.

Most of the e-mailers said they didn't live in Nevada, but many said they visit the state annually for shareholder meetings. Those junkets would no longer happen if they weren't incorporated here, they said.

"I incorporated in Nevada to escape the ever increasing fees and (bureaucracy) in California," wrote Kyri Kambanis of Lincoln, Calif. "Now Nevada wants to double the corporate fees. Businesses will simply have to move again. California is ruined. Don't ruin Nevada."

Assembly Minority Leader Heidi Gansert, R-Reno, said she read many of the e-mails. She noted the "vast majority" of the missives came from out-of-state entities "using our corporate shield."

"I think it's important for us to first listen to our Nevada constituents," Gansert said. "I do think we're offering a strong corporate shield here, and I'm not sure an increase in the fee from $100 to $200 should affect the number of people we have registered in the state."

Tennie Sedlacek, president of Incorp, disagreed. Like Gansert, Sedlacek didn't expect an additional $100 a year to matter to most of her clients. Their response to her call for action changed her mind.

Sedlacek acknowledged that Nevada's business-filing costs would remain competitive compared with California's. Companies incorporated in Nevada would pay $225 a year between business-license expenses and annual statements, while businesses incorporated in California pay $825 a year for equivalent documents. But other Western states have little or no comparable fees. Wyoming, for example, charges $50 a year for corporation renewal, Sedlacek said.

Executives at MGM Mirage, which would pay steep new payroll taxes under the Legislature's plan, think too many businesses don't pay enough.

"Businesses of all stripes from all over the country and the world come here to transact business and make a profit, and we don't charge anything for that," Feldman said. "It's just unfathomable."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.