Taxes don’t bleed

A group of Nevada tax reformers called a news conference in front of the downtown Reno federal building last week and only one reporter showed up.

“Tax reform makes people’s eyes glaze over,” said state legislative candidate Robert Townsend.

The group called for “immediate action on a jobs measure, repealing the Bush tax cuts for the wealthiest, reinstating the estate tax, closing corporate tax loopholes and making tax relief for working and middle income families permanent.”

Democratic leaders in the House last week got the votes they needed from conservative Democrats to pass a jobs bill by dropping funds for health insurance subsidies for jobless workers while retaining dozens of tax breaks for businesses and delaying until next year a tax hike on profit shares for managers of financial partnerships.

Those kinds of things were a target of the Reno group. They said the lost matching funds are built into Nevada’s state budget for the rest of 2010, and unless those funds are reinstated, another special session of the Nevada Legislature is likely. It “works out about $100 million for Nevada,” said Daniel Trubman of the State of Nevada Employees Association/American Federation of State, County and Municipal Employees (AFSCME). “So directly, it affects Medicaid, obviously. But also this $100 million will save the state from having to make such horrible decisions as it’s going to have to make.”

Union organizer Karl Stark said getting the matching funds back, along with unemployment funding, was important in the short run. But he added, “We need to fix the things that made this an elongated recession in the first place.” Those include, he said, ending the Bush tax cuts and corporate tax loopholes that subsidize moving jobs overseas.

“They got off the hook for quite a long time while George Bush was in office,” said Progressive Leadership Alliance of Nevada leader Jan Gilbert. “It’s time they paid their fair share.”

Although some business leaders and politicians say recovery is underway and the nation needs to turn its efforts to deficit reduction, these activists said the faint hints of recovery are no reason to turn away from job creation. That comes first, they say, because only with high employment can the deficit be dealt with.

“Right now jobs are more important than the deficit,” Stark said. “People won’t get back to work, there’s not a base there that’s going to be able to cut down on the deficit. We need to get to go back to work, we need to do it now, and then we need to make sure that we don’t have any problems that got us here in the first place.”

While some Republican leaders have talked about a need to end unemployment extensions because jobless workers are becoming unmotivated to look for work, these activists said jobs need to be created and COBRA and unemployment benefits extended, and deficit reduction will take money from all those things. Deficit reduction, they believe, is an interest of the wealthy who so far are the main ones experiencing recovery. Meanwhile, state governments and municipalities are hurting when they try to help the unemployed.

“There’s a bill [in Congress] that has tax reform elements—closing tax loopholes for hedge fund managers—and using some of that revenue to help out the states,” Trubman said.

Murder trumps taxes

The group said they sent out news releases about the news conference to local newsrooms and had hoped there would be interest in the tax issues and its impact on Nevadans. “You can get people interested in tax reform when you put a human face to it,” said Tracy DuPree, a furloughed state worker.

One of those human faces who has an interest in the lost matching funds attended the event.

“In our case it really has meant the difference between life and death,” said substance abuse counselor Erik Schoen. His wife’s chronically ill daughter was in a nursing home for an extended period because she requires constant tending. “And once we bought our first home, we wanted her to have a quality of life that meant something beyond just staring at the same four walls and being kept alive. And so with Medicaid dollars, we were able to bring her home.”

But his story never got heard because reporters failed to appear. Meanwhile, two blocks north there were so many news crews at the courthouse for a murder trial that the county set up a “media staging area” in front of the building for crews to use in doing follow-up reports on the previous day’s guilty verdict in the James Biela murder trial.

“It’s hard to compete with something sexy like murder,” DePree said.

Many elements of the group’s proposals run afoul of Democrats in Congress. In October, U.S. Rep. Shelley Berkley, a Nevada Democrat, introduced legislation to cut the federal estate tax. “In these challenging economic times, we need to encourage job creation and provide stability for employers,” she said in a prepared statement. “The certainty created for family owned businesses by our legislation will unlock resources for new job creation and to spur innovations that will help these employers compete at home and in the global marketplace.” The state’s other Democratic House member, Dina Titus, has taken a similar stance.

The Center on Budget and Policy Priorities said Berkley’s measure would add to the deficit while benefiting a tiny number of wealthy people, that it “would cost $91 billion more over the first decade (2012-2021) than extending the tax under its current rules as the President has proposed, yet would benefit only the nation’s wealthiest 0.2 percent of estates since they are the only ones subject to the tax under the current rules.”

The anguish some Democrats are experiencing over the fate of the estate tax has subjected them to jokes. Even one business website used the headline, “Senators Are Pushing To Cut Taxes for Paris Hilton.”

The estate tax, a rare tax that hits the rich, ended last year. Before that, it was at a 45 percent rate. If Congress does nothing, the estate tax will come back to life at the pre-2002 rate of 55 percent. That’s what President Obama wants. Negotiations have been going on in Congress on reviving the tax.