Nevada Margin Tax Initiative Voted Down in Landslide

One of the initiatives we were watching most yesterday was the vote on implementing a “margin tax” in Nevada, which was an attempt to raise revenue for public schools. Today, the news is that the initiative was voted down in a landslide, 78.8 to 21.2 percent with 95 percent of precincts reporting as of post time.

If you’ve been following our blog, you’ve seen the two posts my colleague Liz Malm wrote this week that pointed out that 1) only five states have gross receipts-style taxes because they are so economically damaging, and 2) that policymakers in Texas are very displeased with their margin tax, and it’s not worth copying.

But there are other interesting elements going on with this initiative too. For example, the Nevada AFL-CIO was the group that filed the initiative, but later passed a resolution to officially oppose the measure. In their official statement, they said it would “cost many of our members their jobs and raise the cost of living on Nevadans on a fixed income and on citizens that are still struggling to make ends meet after years of a terrible recession.” Going up to the election, the Nevada State Education Association (the teacher’s union) was, from my reading, the only group supporting the measure.

Another interesting feature of this ballot question was how far off the polling numbers were from the actual results. Here’s a sampling of polls from Ballotpedia leading up to the vote:

We heard some rumblings before the vote that voters were misinformed by the branding by proponents of the measure as the “Education Initiative,” and did not know that the question would create a new tax. I don’t know exactly why things flipped so dramatically from the opinion polls, but my guess is that sizeable ad campaigns were continually reminding voters that Measure 3 was in fact a tax measure.

Regardless, this is good news, both for Nevada and the rest of the country. We sometimes hear a faulty line of reasoning from states that a) Texas is great, b) Texas has a margin tax, so c) margin taxes are great. Texas’ fiscal structure has many great features, but the margin tax isn’t one of them. And if you don’t believe me, just ask any of the sponsors of the ninety bills filed last year in the Texas legislature to amend or repeal the margin tax.

More on Nevada.

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