Nevada Governor Attacks Tax Foundation Report

March 27, 2015

Yesterday we released an independent report (PDF) analyzing Nevada Governor Brian Sandoval’s proposed Business License Fee tax. The proposal replaces Nevada’s current $200-flat business license fee with a tiered gross receipts tax.

Governor Sandoval quickly responded with a statement calling our report “utterly irresponsible, intellectually dishonest, and built on erroneous assumptions.” His ally Senator Michael Roberson added that our report “is nothing more than a disingenuous hatchet-job.”

The disappointing ad hominems from Governor Sandoval and Senator Roberson cloud the serious issues raised in our impartial analysis:

  • The BLF proposal has 67 revenue ranges for each of 27 industry categories, totaling 1,811 possible tax brackets.
  • BLF taxpayers will face absurdly high marginal tax rates, reaching over 13 million percent and likely distorting business decisions.
  • If the BLF tax burden were calculated in terms of a state corporate income tax, rates would range wildly from 0.2 percent to a punitive 77 percent.
  • Tax-motivated business restructuring would harm Nevada business competitiveness, and the punitive rate on the railroad industry likely violates federal law.
  • The tax rates for each industry were calculated using Texas data from a single year, which is not representative of Nevada’s economy.
  • The revenue estimates are probably overstated, which will lead to a revenue scramble when the tax underperforms.

Our findings echo the strong consensus from other independent scholars all over the country that gross receipts-style taxes make states less competitive and harm job creation. Governor Sandoval and Senator Roberson have an obligation to explain why their proposal won’t cause the same negative effects that have befallen other states.

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