a service of the Nevada Policy Research Institute

 

Who Really Pays Nevada's Business Taxes?

(Editor's note: This analysis was originally published in January, 2003. NPRI is currently working on an update, using more current numbers.)

The 'Fair Share' Fib

By Steven Miller

For the last 15 years -- escalating sharply in the last two -- Nevada's non-gaming businesses have been subjected to a prolonged campaign of slander.

The incessant allegation has been that non-gaming businesses do not pay their "fair share" of Silver State taxes.

Much of the campaign, especially lately, has been malicious and demagogic. It has also been a massive, premeditated diversion from the real issue of whether any more taxpayer money should be given to Carson City to spend. 

But perhaps the most amazing aspect of this campaign against Nevada's non-gaming businesses is how doggedly those conducting the campaign have scrupulously avoided telling the whole story.

What is that story? That it is Nevada's non-gaming businesses who pay the great bulk of state and local taxes!

Consider the following chart. Its data comes from the U.S. Census Bureau and the U.S. Department of Labor's Bureau of Economic Analysis (BEA). More importantly, it reports the business taxes paid in the state of Nevada, from 1977 through 2000, by the gaming and non-gaming sectors of the business community.

RelativeShare.gif (4021 bytes)

According to the BEA, the business taxes reported in this data include all Nevada tax liabilities, "such as general sales and property taxes, that are chargeable to business expense in the calculation of profit-type incomes and certain other non-tax liabilities to government agencies that are treated like taxes," such as Nevada's heavy regulatory and inspection fees. Also included in the BEA's figures are Nevada's excise taxes and -- significantly -- state gaming taxes.

It is of course true that the resort industry in Nevada, by attracting visitors to the state, is entitled to claim some credit for a certain additional proportion of state sales tax revenue. But even if the Nevada Resort Association's somewhat extravagant claims in this regard were accepted at face value, the chart makes it very clear that it is non-gaming business people who pay the great bulk of the Silver State's state and local taxes. Moreover, as the following alternative representations of the same data emphasize, the relative contribution of the gaming and non-gaming sectors has been changing profoundly for many years.

Percent paid by Gaming

Percent paid by Non-Gaming

PercentPaid_NonGaming.gif (2960 bytes)

The data behind the charts comes from
the federal Bureau of Economic Affairs

What is immensely interesting -- indeed highly illuminating -- is that, during this entire public hullabaloo about raising Nevada taxes, the data revealed in these graphics has never been acknowledged by anyone in state government, the Governor's Task Force on Tax Policy, or the Nevada news media.

Now, does that seem fair?


Steven Miller is policy director for the Nevada Policy Research Institute.