More than a century ago, legendary editor William Allen White asked, “What’s the matter with Kansas?” A couple of recent events beg the question, “What’s the matter with Nevada?” The answer is both simpler and more complex.
The New York Times recently reported that Apple has a small office in Reno—it’s a subsidiary called Braeburn Capital—that invests its money. That should be glorious news, since Nevada needs all of the outside investment it can get. Unfortunately, the office exists only to enable Apple to claim Nevada as one of its headquarters instead of California, where the real action is. Through this and other, similar means, Apple peels billions off of its tax bill.
It’s nice that Apple can afford to do this while the Clark County School District may lay off more than 1,000 teachers. Braeburn has invested $2.5 billion. If Nevada had, say, just a 1 percent tax on what Braeburn makes off those investments, we might not be talking layoffs right now.
To which Nevada’s anti-tax crowd might respond, “If we had that tax, we wouldn’t have Braeburn at all.” To which a clear-thinking person might respond, “What’s the difference?”
The anti-tax crowd won’t be too happy that Gov. Brian Sandoval did the right thing by reaching an agreement for sales taxes to be assessed on online purchases in Nevada from Amazon.com. But it speaks volumes that the governor had to negotiate with a company instead of the Legislature passing a law or the public approving it via initiative.
Not that some haven’t tried. In 2003, Gov. Kenny Guinn pushed through an $800 million-plus tax hike that broadened the tax base. Not only was it not enough, but during the next legislative session, he agreed to support a rebate of $300 for each vehicle registration. After all, Nevada’s economy was booming. Why keep that money for a rainy day or put it into education?
AFL-CIO honcho Danny Thompson has been pushing an initiative for a business-profits tax that could bring the state a billion dollars. The Nevada State Education Association declined to support it because the money would go not exclusively to K-12, but to “education,” which might include higher education. Thus did the teachers union shoot itself in the foot so brilliantly that all of its toes are gone.
From its beginnings, Nevada has been guilty of under-taxation, especially of business. The constitution treated mining differently than other businesses, giving it a benefit it enjoys to the present. In the 1930s, Nevada came up with a campaign to promote its lack of taxes: One Sound State. Nevada proudly advertised that it had no income, corporate or estate taxes. It hoped to attract wealthy investors who would buy property and thereby contribute to the economy. E.L. Cord of the Cord empire of autos, aircraft and engineering moved to Nevada, as did Max Fleischmann of yeast fame. They even set up foundations and occasionally invested in politicians.
But the attitude has survived that we don’t need government—which we “prove” by having the fewest state and local government employees per capita in the U.S. Nevada also has one of the lowest tax burdens and, according to some sources, one of the best business climates for that reason. But we also have the worst unemployment rate. Can anyone say “cognitive dissonance”?
When the teachers union won’t back an initiative to help education, and we take no bite of an Apple and still end up with the worm, we should be shouting from the rooftops that it’s time for change. Instead, we seem to hear the sounds of silence. Blame the top or the bottom if you like, but this Nevada apple increasingly appears rotted throughout.