Remember the golden rule

The mining industry of Nevada has, in the state’s early years especially, been the foundation of its economy and community development. When the state was founded nearly a century and a half ago, mining was the primary interest group that swayed the development of local laws and Nevada’s constitution as a whole by instituting tax provisions that left mining revenue largely untouched by the state.

By refraining from taxing the mining industry, the state benefited from the rush of prospectors and affiliated businesspeople who came to stake their claims, especially in northern and central Nevada, where many small towns still hold testament to the power that mining had to encourage growth in undeveloped regions.

But as the state has changed over the years and developed its lucrative gaming and tourism industries, mining has been seemingly given special treatment when it comes to keeping up with tax laws. Even with approximately $8.76 billion in gold mining revenue in 2011, its tax rate to the state totaled only slightly more than 1 percent of its revenue. While $104 million is nothing to sneeze at, it does make one wonder why it has taken so long to address the disparity in the mining industry compared to others in Nevada.

Currently on the state’s legislative table is Senate Joint Resolution 15, which would remove the industry-specific tax protection for mining from Nevada’s constitution. The Legislature began the process of passing SJR 15 back in 2011, and it must be passed again this year in order to be put to popular vote. If Nevadans vote to pass SJR 15, then it would be in the 2015 Legislative session that constitutional changes would be implemented and even later than that increased tax revenue from the mining industry could be collected. For proponents of the resolution who are looking for a quick-fix for Nevada’s budgetary problems, they should know that additional taxation for mining is not the short-term solution that they are looking for.

The mining industry is not exactly thrilled at the possibility of their tax protections being revoked and has registered around two dozen lobbyists to defend their constitutional protection. There is the threat of mining companies moving their business elsewhere so as to avoid taxation, and opponents of the resolution postulate that the Nevada economy would take a major hit without the support of the mining community’s spending in other parts of the state.

The thing is, mining doesn’t provide nearly as many jobs as politicians and lobbyists seem to think it does. If mining corporations were to abandon ship in Nevada, job loss would be minimal, and the corporations would be forced to move to less lucrative, less regulated mining ventures, such as those in Central and South America.

Mining doesn’t employ as many people as gaming and tourism, so their absence wouldn’t be remarkably detrimental to the employment economy, especially not in major cities like Reno or Las Vegas. So if SJR 15 passes, the mining companies have a choice: either leave the state that has accommodated them for more than 100 years, or stay and pay a reasonable tax that is comparable to other Nevada industries.

While I am rarely a proponent of increased taxes, it would seem that proportional and reasonable incremental increases would do more good for Nevada’s economy than hosting an industry whose profits go to out-of-state and, in most cases, out of the country. Without proportional income and new jobs coming to Nevada, then the benefits of accommodating the mining industry are moot. If the Legislature wants to increase taxes, however, they must be willing to work with the mining industry to determine a fair agreement and a solid plan for how the industry will fit into Nevada’s new economy.