Democrats Up to Their Old Tricks
Those would be the Democrats presently populating the state legislature. As usual, the politicians schmooze for four or five months of the legislative session, and then start getting down to business with tax and budget decisions at about the eleventh hour. Same thing this year – last week, the Dems came out with their $1.5 billion “revenue plan” after equivocating for lo these many moons, alluding to the need for “structural reforms” in the Nevada business model, and other similar euphemisms. Translation: raise taxes – bottom line.
With reference to the proposed overhaul of the state tax structure, Speaker Oceguera (D-Las Vegas) was heard to utter the notion that, “This is the reform, I think, Nevadans have been waiting for.”
Right – we’ve all been sitting around just “waiting for” the politicians to tell us how much the taxes have to go up. Senate Majority Leader Horsford (D-Las Vegas) says the plan will avert the need for some of the “revenue enhancements” proposed by Governor Sandoval.
You have to give the Dems the “artful language” award, however, in devising the nomenclature of the newly proposed “margin tax,” which would be a mainstay of their plan. Most folks have, for eons, thought of the traditional “income tax” as a levy on the bottom line – the excess of revenues over expenses. Is it possible that the Dems actually think they can pull the proverbial wool over the eyes of voters by coming up with the new name “margin” to replace the traditional concept of net income?
We hope they aren’t that stupid.
The key elements of the Democrat plan:
- Extend the sunset on most of the taxes approved during the 2009 legislative session, thus raising $600 million or so. (Given their bent for creative lingo, why haven’t the Dems called this the “Kick the Can Down the Road” provision?)
- Implement a tax on services along with the “margin” tax – another $600 million or so to hit the till.
- Add $300 million or so from a variety of other sources.
- Reduce the sales and use tax rate and phase out the Modified Business Tax.
And while we’re on the subject of Democrats and tax increases, how about the word
which has recently come up once again that the days of the Federal tax exemption of municipal bond income may be numbered?
Fact is, as recently noted by the Wall Street Journal, that this little nugget has actually come up some 125 times just since 1918!
In December, the President’s debt commission suggested once again that the tax exemption on new muni bonds should be lifted. A bill proposed by Sens. Wyden (D-Oregon and Coats (R-Indiana) would reduce the value of the income tax benefits associated with munis. And a bill soon to be introduced by Rep. Tierney (D-Massachusetts) would fully tax the interest on munis after December 31, 2011.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments below, at email@example.com, and invites readers to consider his other commentary at www.taxlawtips.com.