Legislators not likely to change tax system
In May, when the South Washoe Dems held a meeting to hear only one side of the ballot measure raising sales taxes in the county for school needs, a retired school district employee attended and asked why that particular tax had to be the source. “It’s so punitive,” she said. The meeting was at the Club at Arrowcreek, a location no doubt frequented by the party base.
Jeff Church and Tracy Figler were the closest thing to an organized opposition to the measure, WC-1. They wrote guest essays, spoke on radio talk shows, and spent what little money they could.
An array of other citizens did what they could to combat the tax increase. John Linden of Reno wrote a letter to the editor of the Reno Gazette-Journal. After the election, he told us, “This could have been adjusted with the property tax. If the legislature had put a few more bucks on property tax the problem is solved. It was a very simple fix. … There are laws for them and law for you and me. I’m tired of the double standards.” Developers and casinos, he said, got off “scot-free.”
Not until the very end—and too late—did car dealers who had been reluctant to buck the business community finally jump into the campaign with some advertising. They worried that car buyers will go to Fallon or Carson City to avoid the higher sales taxes. Otherwise, opposition to WC-1 was a mom-and-pop operation.
Many of the opponents were taken aback when the supporters’ victory statements came out. Trump and Clinton managed to say nice things about each other, but the statements of supporters of the tax increase offered no concession to the fairnessconcerns of people who had fought against a million dollar campaign.
In a 301-word statement from Save Our Schools, there was no bow to the working poor who will bear the heaviest burden of the tax increase.
In a statement to the Reno City Council, Perry Di Loreto of Di Loreto Homes said, “And now to entrust our school board with the significant amount of money that is going to be raised by its additional sales tax kind of proves to me again what I’ve already known, is, our community gets it, and we can place emphasis on the things that are very important to it. I’d also like to remind everybody that we all need to remain diligent. Significant funds will be generated, and we need to watch to make sure that they are spent in the ways that they were intended. School board races are races that have not had enough attention paid to them, arguably some of the most important elected positions in our community.”
There was no reference to hard-pressed workers—or to the fact that Di Loreto had dodged impact fees that might have been considered by the Nevada Legislature if WC-1 lost.
The measure won with a 6.39 percent margin of the vote. It is the sixth time sales taxes have been raised in Washoe County for schools, at least the eighth time overall. It gives Washoe County one of the highest sales taxes in the nation.
The sales tax was selected for this use by an unelected committee set up separate from the school district. A builders association and the casino lobby both appointed members. Homeless shelters or the Progressive Leadership Alliance of Nevada ded not. Real estate transfer taxes and room taxes—used for tourist promotion—were eliminated from consideration by the committee. One member complained about the regressiveness of sales tax.
The Institute on Taxation and Economic Policy reports that the poorest 20 percent of Nevada families pay 6.1 percent of their income in sales tax. The wealthiest one percent of Nevada families pays six-tenths of one percent.
Both Standard & Poor’s and the International Monetary Fund have warned that income inequality causes economies to stagnate and economic growth to lag.
The IMF reports, “In advanced economies, policies should focus on reforms to increase human capital and skills, coupled with making tax systems more progressive. … [Inequality] is associated with lower output growth over the medium term.”
No one has ever accused Nevada of having an “advanced economy.” A report commissioned by the Nevada Legislature describes its tax system as “among the most vertically unfair in the nation.” It is not just the sales tax. Many elements of the state’s tax “system”—if such a term applies—are regressive. The same report to the legislature said “there are other regressively distributed taxes and virtually no progressively distributed levies.”
And 2016 has made things worse. In addition to the 0.54 percent sales tax hike in Washoe, sales and gas taxes went up in Clark County.
There seems to be little interest among legislators in doing anything about the high sales tax in Washoe.
Assemblymember Richard “Skip” Daly said that “if there was any future reduction in sales tax it would have to be at the expense of the other current uses of existing sales tax. Reducing sales tax to offset this [WC-1] increase if it is approved would create a significant amount of opposition by the other sales tax users and the measure likely would never have been proposed.”
Other counties have managed. Washoe uses almost its entire room tax for tourism promotion while Clark uses at least 28.7 percent for education. Every county has more diversified school funding than Washoe. Columnist Andrew Barbano notes that “Washoe is the only county lacking” a real estate transfer tax and says there are at least five fairer ways to fund schools.
Sen. Julia Ratti said, “I agree with the concern with our overall reliance on sales tax. I’m interested in property tax reform. With a looming $400 million deficit I don’t believe we’ll likely be able to reduce any revenue source but rather need to remove some constrictions on property tax which would benefit local government and schools.”
In fact, there have been complaints about property taxes and schools for half a century, and the Nevada Legislature has yet to act on it.