Nevada Governor Releases Outline of Revised Tax Plan

Nevada Governor Brian Sandoval has proposed a revised tax plan that combines elements from his earlier proposed restructuring of the state Business License Fee (SB 252) and alternative plans floated in the Assembly that focus on the state’s Modified Business Tax (MBT) and the existing BLF structure (AB 464). See the Revised Plan’s press release here and the presentation outlining the plan here.

The Revised Plan has three main components. It would:

• Increase the current Business License Fee (BLF) from a flat $200 for all businesses to $300 for non-corporations and $500 for corporations (expected to raise $46.3 million in net new revenue);
• Re-structure the state’s existing payroll tax, known as the Modified Business Tax, by increasing the general business rate from 1.17 percent to 1.475 percent, reducing the exemption level from $340,000 ($85,000 per quarter) to $200,000, creating a new credit for 50 percent of Commerce Taxes paid, and retaining the higher 2 percent rate for financial institutions, while also adding mining companies to this higher-rate category (estimated to bring in $516 million in net new revenue); and
• Create a new tax called the Commerce Tax, a gross receipts tax with different rates for different industries paid by firms with in-state revenues exceeding $3.5 million, and includes a credit for MBT paid (expected to raise $60.7 million in net new revenue).

Also worth noting are plans proposed by Assembly Minority Leader Marilyn Kirkpatrick that would make structural changes to the state’s Live Entertainment Tax (AB 392 and AB 393), broadening its base and removing some of the arbitrary provisions that exist in its current form. These should be part of this year’s tax reform efforts.

In a March 26^th report, we identified 12 serious issues with the Governor’s original gross receipts tax proposal. Here we evaluate which have been fixed under the Revised Plan (click table to enlarge).

We’ll continue to update this table as more information is released. More on Nevada here. Follow Liz and Joseph on Twitter at @elizabeth_malm and @jdhenchman, respectively.