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The Biggest Blown Opportunity of the Year

While it is true, with metaphysical certitude (hat tip to John McLaughlin), that Republicans seemingly never blow an opportunity to blow an opportunity (hat tip to Fred Barnes), Democrats in the the 2011 legislative session could well go down in history as blowing the Mother of All Tax Reform opportunities.

When it comes to Nevada’s tax system, there are two separate, distinct issues: the amount of taxation and the manner of taxation.

Without a doubt, Democrats believe the amount of taxation today is insufficient. The governor disagrees. As such, he’s declared no-new-taxes.

And since tax hikes require a 2/3 super-majority vote in both legislative houses, and the Democrats clearly don’t have the votes they need in the Senate, there will be no tax hike – especially the obscene $1.2 billion tax hike Democrats just proposed in an effort to completely and totally destroy what’s left of Nevada’s struggling economy.

Everybody knows it…except, apparently, Democrat leaders who are suffering from a severe case of denial. Which is a shame for their team. Because if they had accepted that which they cannot change, they may have succeeded in changing something big they claim they want.

Broadening Nevada’s tax base.

Had the Democrats pursued REVENUE NEUTRAL tax reform – imposing a tax on certain services while simultaneously lowering the tax on sales so that the two were equal – instead of pig-headedly pursuing a massive tax hike, they very well could have gotten enough Republican support to pass it.

But they didn’t.

Don’t get me wrong. I’m not advocating for such a change – especially since the Democrats would only come back and try to raise taxes in the future on sales AND services. But enough GOP legislators could have been persuaded in let’s-make-a-deal fashion.

Which would have meant that when the economy improves – and it will – the amount of revenue that would come in from both sales AND services would skyrocket. And that would, in short enough time, certainly by the next legislative session, result in a windfall revenue surplus that would require a whole new debate: whether to spend the money or rebate it.

Alas, as long as no one would be “raising” taxes, I doubt many GOP legislators would object to spending it. Indeed, Democrat and Republican legislators alike LOVE to spend other people’s money…just on different things.

For want of a nail, the shoe was lost. And for refusing to compromise and accept the no-new-taxes reality, Democrats have blown their best chance to truly broaden Nevada’s tax base while at the same time setting themselves up for a pot of gold at the end of the recession rainbow.

There simply will be no bigger blown opportunity in the 2011 Legislature. Not even by Republicans.