Assembly Republican leaders unveiled a tax plan of their own Monday, less than a week after Gov. Brian Sandoval presented the details of his bill to restructure the state’s business license fee and Democratic Sen. Pat Spearman released her own tax proposal. Spearman and the Republican leadership insist they aren’t trying to undermine the governor, but want to spark discussion and offer different options for arriving at the same goal: More money for education.
MODIFIED BUSINESS TAX:
Existing law: General businesses and mining pay a 1.17 percent tax on gross wages while financial sector businesses pay 2 percent; health care expenses can be deducted. Businesses with payrolls smaller than $85,000 per quarter are exempt. About 12,500 of Nevada’s estimated 330,000 business entities pay the modified business tax.
Gov. Brian Sandoval’s plan (SB252): Increases mining industry payroll tax rate to 2 percent — on par with financial sector businesses — while keeping rate the same for general businesses.
Assembly Republican plan: Would change modified business tax rate from 1.17 percent for general business and 2 percent for financial sector businesses to 1.56 percent for all businesses. Exempts companies with payrolls less than $50,000 per quarter and removes a deduction for health care premiums.
Sen. Pat Spearman’s plan (SB378): Would repeal the modified business tax, which Spearman says discourages hiring.
BUSINESS LICENSE FEE
Existing law: Business licenses cost a flat $200 per year regardless of company size. That is set to go down to $100 in July.
Gov. Brian Sandoval’s plan: Calls for a tiered business license fee ranging from $400 to $4 million annually. A company’s tax burden would be determined by its revenue and where it falls among 30 industry types. The plan is expected to raise about $437 million over two years.
Assembly Republican plan: Annual rate would rise to $500 for corporations and $300 for other businesses, raising an additional $126 million over two years.
Sen. Pat Spearman’s plan: Proposes the business license fee remains a flat $200 per year, while businesses that are incorporated in Nevada but don’t conduct trade in the state would pay $400.
Existing law: Temporary tax increases will end July 1. Payroll taxes will revert to a lower rate, a 0.35 percentage point sales tax increase will disappear, and the business license fee will drop from $200 to $100 a year.
Gov. Brian Sandoval’s plan: Makes the sunset taxes permanent, raising an estimated $580 million over the next two years.
Assembly Republican plan: Changes two taxes scheduled to sunset: The modified business tax and business license fee. Republican Assembly leaders say they support the concept of continuing the other taxes set to expire.
Sen. Pat Spearman’s plan: Extends the $200 business license fee that’s set to expire, but does not address the larger issue of whether all sunsets should be extended.
Gov. Brian Sandoval’s plan: Would raise the cigarette tax from 80 cents to $1.20 per pack, change the way slot machines are taxed, and hike the mining industry’s payroll tax rate from 1.17 percent to 2 percent.
Assembly Republican plan: Would repeal a bank branch excise tax that brings the state about $3 million a year. Banks must pay $1,750 to start a new branch, and Republicans say that discourages banks from expanding into underserved areas.
Sen. Pat Spearman’s plan: Would impose a 0.47 percent tax on business gross receipts that exceed $25,000 in a quarter. Removes a provision that allows mining companies to deduct the costs of health care premiums when calculating their taxable income.
Existing law: Would generate $6.3 billion in the next two years if temporary “sunset” taxes expire.
Gov. Brian Sandoval’s plan: Would raise $7.3 billion over two years.
Assembly Republican plan: Due to a slightly faster tax implementation schedule, would raise about $62 million more than Sandoval’s plan for a total of about $7.4 billion over two years.
Sen. Pat Spearman’s plan: Would raise as much money as Sandoval’s plan: $7.3 billion over two years.