Reading in the Las Vegas Sun yesterday, I found a story about fees going up for water, electric, student fees, small businesses, even bus fares and how these fees tend to negatively affect those who are hurting the most here in Nevada. What the article does not mention is how disproportionate the burden of sales and excise taxes are on those with lower incomes. More on this in a minute.
Revenues are down at the state and local government levels in Nevada, and budget deficits have become the major issue for lawmakers. Keep in mind that Nevada has not only one of the smallest state governments in the United States, Nevadans also enjoy the 2nd lowest tax burden of all the states. Still, the governor and lawmakers are left with tough decisions when faced with filling budget holes.
Put simply, lawmakers have two choices: cut programs, or raise revenues…or some combination of both.
There is at least some consensus even among Republicans and Democrats that relying solely on cuts to programs is not a viable option in the state’s best interest (or more importantly their political futures). Democrats have done a great job swaying pubic opinion against cuts.
Republicans have been using the anti-tax rhetoric so long, discussing a tax increase to fill Nevada’s budget deficit would be out of the question for nearly all of them. How can they run on the one issue they seem to have success with if they don’t even live up to their rhetoric? So Republicans keep talking about how bad a tax increase would be.
Because the Republican anti-tax rhetoric has been so successful on public opinion, nearly all of the Democrats in elected positions are afraid to talk about tax increases as an option. Instead, Democrats are left to talk about how damaging the cuts would be.
Republicans: “Taxes are bad.”
Democrats: “Cuts are bad.”
As it turns out, most Nevadans agree with both, leaving lawmakers stuck between a rock and a hard place.
Knowing how much the public hates both cuts and taxes, Republicans and Democrats have to get creative to avoid damaging their own political futures while trying to demonize the other side as much as possible. That’s Nevada politics in a nutshell.
The end result: A tax structure with minimal impact on wealthy incomes, corporate profits or accumulation of property ownership; and rather a high emphasis on use taxes, fees and penalties disproportionately more of a burden on people with lower incomes. Hence Nevada’s highly skewed regressive tax structure.
Take a look at this report on page 78. Here in Nevada, the lowest 20% of income earners are paying about 10% of their incomes to taxes, while the top 20% are paying 4.6% (the top 1% paying 1.6%). Where is the justice in this?
Of course this doesn’t include many other inequitable scenarios like cutting higher education from the state general fund, and paying for the cuts with tuition increases that have doubled in a decade. What if tax rates doubled in 10 years… we wouldn’t hear the end of it. No one upset at tuition increases though.
Not one day after writing this article, Assemblyman Pat Hickey introduces legislation that would require people of very low income (if at all) who are on Medicaid to pay co-pays. That’s right, to solve our budget woes, we’ll go to the pockets of poor people LONG BEFORE asking the very wealthiest in our society to cough over a few extra pennies. What the hell is wrong with these people!? (I’m going to hold my tongue, but many expletives come to mind)
Meanwhile, to make sure this status quo remains, the wealthy elite spend untold fortunes on campaign contributions, lobbyists and independent expenditures via super PACs. To make matters worse, the disillusioned folks at the bottom of the totem pole vote less and less, and clearly do not have the influence of money, lobbyists, and propagation machines at their finger tips to try and change their fortunes.
Hope? Perhaps someday, Nevadans will realize that even conservative states like Utah, Texas, Colorado and Arizona have personal income and corporate income taxes that are much more equitable revenue sources to fund their governments. Those states even manage to tax their mining and oil industries at a reasonable level. Nevada can’t even manage that. Despite their multiple billions of dollars in profits, not even mining can pay their fair share. But there is always hope. With a corporate tax and a mining tax coming before voters on the ballot, perhaps we can sidestep the political gridlock in Carson City, force the will of the people on the legislature and end this regressive attack on the lower and middle income earners of Nevada. Keeping my fingers crossed.