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Inoculation Against a Mutated Gross Receipts Tax

The 2009 Legislature passed a series of “temporary” tax-and-fee hikes on businesses which are scheduled to “sunset” next year. However, the state’s budget crisis is likely going to be worse, not better, in the 2011 legislative session. So watch out, baby!

Unlike the private sector, serious decisions on reducing both the number of government employees on payroll, as well as the pay and benefits said employees are pulling down, have been avoided like the plague by our elected officials in Carson City. And since the biggest cost of running the government is tied up in personnel costs, this refusal to address the situation in ’09 will only be exasperated in ’11.

However, in addition to a likely attempt to make permanent, or at least extend, the business taxes passed last year, a concerted effort to broaden the tax base in 2011 is coming your way. “Broaden,” of course, is understood to mean a new tax on Nevada businesses, probably some mutated version of 2003’s failed gross receipts tax.

The inoculation against this tax-hike virus starts with the June 8th GOP primary. The defense is the election of candidates who promise – in writing, but not necessarily in blood – that they will “oppose and vote against any and all efforts to increase taxes.” Period.

Why is this written Taxpayer Protection Pledge so important? Consider what just happened during the 2009 legislative session. Of the four Republican state senators and seven Republican state assembly members who voted for the $292 million room tax hike – not one was a Pledge signer.

In addition, the only legislative Pledge signer to break his Pledge last session over the “temporary” business tax-and-fee hikes was now-retired Sen. Warren Hardy. All the other Pledge signers kept their promise and voted to protect Nevada’s businesses.

As the unofficial “Keeper of the Pledge” here in Nevada, I have a running “naughty and nice” list of gubernatorial and state legislative candidates who have signed the Pledge and those who have not – at least so far. And with the primaries just around the corner, here’s a look at some of the Republican candidates and where they presently stand (as of April 19th).

GOP gubernatorial candidates who HAVE signed the Tax Pledge: Jim Gibbons and Mike Montandon. GOP gubernatorial candidate who has NOT signed the Tax Pledge: Brian Sandoval.

State GOP senator up for re-election who has signed the Tax Pledge: Barbara Cegavske. State GOP senator up for re-election who has not signed the Tax Pledge: Dennis Nolan. Nolan is being challenged in the primary by Elizabeth Halseth, who has signed the Tax Pledge.

Incumbent state assemblymen now running for the state senate who are Pledge signers: James Settelmeyer, Don Gustavson and Ty Cobb. Gustavson’s primary opponent, Bob Larkin, has not signed the Tax Pledge, nor has Cobb’s primary opponent, Ben Kieckhefer. However, the other Republican in this race, Todd Bailey, has signed it.

Incumbent state assemblyman now running for the state senate who has not signed the Tax Pledge: Joe Hardy. His primary opponent, Patrick McNaught, has.

Other Republican state senate candidate who has signed the Tax Pledge: Mike Roberson.

Republican state assembly members running for re-election who have signed the Tax Pledge: Ed Goedhart, Dick McArthur and John Hambrick. Hambrick’s primary opponent, Annie Black, has also signed the Tax Pledge.

Republican state assembly incumbents running for re-election who have not signed the Tax Pledge and who are facing primary challenges: Lynn Stewart and Tom Grady. Republican candidates Scott Chappell and Calanit Atia are running against Stewart and both have signed the Tax Pledge. Republican candidate Gary Gladwill is running against Grady and has signed the Pledge, as well.

In order for Nevada businesses to protect themselves against an epidemic of tax hike fever next year, they need to inoculate themselves against elected officials who say they don’t “want their hands tied” when it comes to tax hikes. Because if their hands ain’t tied, you can bet they’ll be in your pockets!