De facto income tax: Bad bills target out-of-state workers, businesses

Out-of-state license plates are a major source of irritation for Nevada taxpayers. Just about everyone can tell a story of a neighbor or co-worker who got away with keeping a cheaper plate from another state for months or years before finally registering the vehicle in Nevada.

People who live in Nevada should have Nevada license plates. The thousands of people who work in Nevada but live somewhere else, however, are another matter.

Nevada has several population centers near the state’s borders, attracting commuters and businesses from Arizona, Utah and California. Considering the Nevada economy’s fragility and dependence on visitors, the state needs to do everything it can to encourage the free movement of people, goods and services across state lines. It should welcome the economic contributions of those people and companies, who buy taxed goods, stay in our taxed hotel rooms and gamble in our taxed casinos.

But the unpopular, punitive nature of Nevada’s vehicle registration taxes — they’re avoided because they’re among the highest in the West — drives the retributive sentiments of residents and politicians alike. Instead of calling for a cheaper levy on license plates, the angry masses want everyone to suffer.

Which brings us to Assembly Bill 166, which would require out-of-state residents who work in Nevada to register their vehicles here regardless. A companion bill, Assembly Bill 167, would require out-of-state businesses that operate their vehicles in Nevada to register as well. Connie Davis, executive director of the Laughlin Chamber of Commerce, says the bills “are lasered in” on Laughlin and its larger neighbor, Bullhead City, Ariz. Between 70 and 80 percent of Laughlin’s workers commute from Bullhead City, Ms. Davis notes, and Bullhead City businesses come across the Colorado River into the casino town all the time.

Laughlin has a population of about 7,300. Bullhead City’s population is north of 40,000. If Bullhead City and its surrounding area vanished from the map, Laughlin wouldn’t have enough housing and infrastructure to accommodate all the employees its taxpaying businesses need. “Where would we be without those workers and businesses?” asks Ms. Davis, whose organization opposes the legislation.

As written, AB166 imposes a fee of $150 per vehicle, per year, for out-of-state workers, but an amendment reduced that tax to $33. Out-of-state businesses would pay $200 for the first vehicle and $150 for each vehicle thereafter, under the terms of AB167. Penalties for violators start at $100. The Assembly Transportation Committee passed both bills last week.

This is a de facto income tax. The retired Bullhead City couple who drive into Laughlin each day to gamble and eat don’t have to pay the fee, but the waitress behind them in traffic, who serves them, does? If the argument for the tax says Bullhead City commuters use Nevada services they don’t pay for, that ignores the mutual aid provided by the Bullhead City police and fire departments to Laughlin residents. How much will it cost the Nevada Department of Motor Vehicles and law enforcement to implement and enforce this bureaucratic burden in exchange for just a few million dollars in new revenue?

“How do we foster a great economic climate in Laughlin with these fees? How do we persuade businesses to relocate to this area if we’re hitting them with new taxes?” Ms. Davis asks. Make no mistake, these bills will hurt the economies of border communities.

The Legislature shouldn’t pick a fight with Nevada’s neighbors and punish struggling businesses and workers — many of them tip-earning, part-time casino workers — to score political points. Instead of targeting people who can’t vote in Nevada for higher taxes, lawmakers should reject AB 166 and AB 167 and focus on making vehicle registration more affordable for everyone.