EDITORIAL: Margins tax initiative a business killer
By Las Vegas Review-Journal
The margins tax was a terrible idea from the moment the state teachers union put it on paper and began collecting signatures to qualify it for the 2014 ballot. But we now know the initiative is even worse than previously thought: In addition to killing jobs, the plan, if passed, creates a huge disincentive for small business growth.
The so-called Education Initiative was initially thought to exempt the first $1 million in business revenue from the 2 percent tax. The exemption appeared to ensure the state’s smallest companies wouldn’t be drilled by a huge new tax bill amid a weak economic recovery.
It turns out, the $1 million exemption isn’t a true exemption at all — it’s a tax cliff. As soon as a small business exceeds $1 million in taxable revenue (some deductions are allowed), all revenue is subject to the 2 percent rate. To put that in some perspective, imagine a small business logs $1,000,050 in taxable revenue for a given year. If the first $1 million were exempt, only $50 in revenue would be taxed by the new levy. The business owner would have a margins tax bill of $1. Instead, that additional $50 in revenue lifts the company’s tax bill from zero to $20,001. That’s someone’s job.
To recruit, support and advocate for candidates for public office who support private sector job creation, low taxation, a responsible regulatory environment, and effective delivery of essential state services.