Nevada Margin Tax for Public Schools Initiative, Question 3 (2014)
|Nevada Question 3|
|Type:||Indirect initiated state statute|
|Status:||On the ballot|
- 1 Background
- 2 Support
- 3 AFL-CIO opposition
- 4 Opposition
- 5 Polls
- 6 Reports and analyses
- 7 Path to the ballot
- 8 See also
- 9 External links
- 10 References
The Nevada Margin Tax for Public Schools Initiative, Question 3 is on the November 4, 2014 ballot in the state of Nevada as an indirect initiated state statute. The measure, upon voter approval, would institute a two percent margin tax on businesses operating in Nevada. Revenue from the tax would be allocated to public schools, from kindergarten through high school, and kept in the State Distributive School Account.
The two percent taxed margin could be determined using two different methods:
- Taxation of 70% of total revenue of the business
- Taxation of a business’ total revenue minus compensation to owners and employers or cost related to goods sold. A business would choose whether to subtract compensation or cost of goods, but not both.
The measure would also temporarily increase the two percent modified business tax on financial institutions to 2.29% or 2.42%. Revenue would be used to pay for the administration of the margin tax.
The initiative was filed by the Nevada AFL-CIO, led by Executive Secretary Treasurer Danny Thompson, and the Nevada State Education Association (NSEA). However, on May 2, 2014, the AFL-CIO passed a resolution to officially oppose the measure. It is still being supported by the Nevada State Education Association.Supporters call the measure The Education Initiative. Opponents call the measure The Margin Tax Initiative.
In 2006, Texas implemented a margin tax, which supporters of the Nevada tax have used as a model in crafting their own. The tax fully went into effect in 2008, after significant resistance from small businesses. Officials anticipated the tax would raise $5.9 billion per year, with some putting that number even higher at approximately $12 billion. However, in reality, 2008 saw only $4.45 billion in revenue from the margin tax; that number fell below $4 billion by 2009.
The measure was initiated by the Nevada AFL-CIO and the Nevada State Education Association, the state affiliate of the National Education Association, though it is now only supported by the NSEA.
The Education Initiative PAC provided their fact sheet to argue in support of the initiative:
|“||Nevada is 49th in per pupil spending
Nevada has the lowest corporate taxes in the United States
Education in Nevada has suffered through over $700 million in cuts since 2009
A study referred to Brian Sandoval's 2011 proposed cuts to k-12 education as "by far the largest in modern history" of Nevada
87% of Nevada Businesses would be unaffected by TEI
Research shows that a high-quality education increases the earnings of individuals and the economic health of their communities.
—The Education Initiative PAC, 
An "explanatory video" put out by The Education Initiative PAC.
The Nevada State Education Association argued the following in support of the initiative:
- "Education is everyone’s responsibility. Businesses benefit from a qualified, educated workforce, yet they do not pay their fair share. At a critical time in Nevada’s economy, it is imperative big businesses invest in K-12 education to ensure our economy turns around and improves."
- "Funds raised through the Education Initiative will go directly to the Distributive Schools Account—the education budget—in the state’s general fund. This funding can be used to reduce class sizes, more tools and technology, early childhood education, a safe and supportive learning environment, and the ability to attract and retain quality educators."
|PAC||Amount raised||Amount spent|
|Education Initiative PAC||$1,236,250||$677,098|
Top 3 contributors:
|Nevada State Education Association||$1,135,000|
|National Education Association||$100,000|
|Nevadans For The American Dream||$1,000|
|Committee to Elect Segerblom||$250|
The measure was initiated by the Nevada AFL-CIO and the Nevada State Education Association, the state affiliate of the National Education Association. However, Executive Secretary Treasurer Danny Thompson of the AFL-CIO, despite giving his prior support, criticized the plan, saying he supports a smaller margin tax of .8%. The Nevada AFL-CIO decided to hold a vote in May 2014 as to whether to support the initiative. On May 2, 2014, the AFL-CIO officially voted to oppose the measure. After the resolution opposing the measure was passed, Thompson released the following statement:
The Nevada State AFL-CIO has always supported funding education to the National Average. There is no equivocation on our support for funding our schools so that our children receive a great education. We are a strong voice and advocate at every level of government for more funding for classrooms, teachers, and school buildings. The vote today in opposition to the margins tax initiative is not a vote against education. It is a vote against a flawed initiative that will cost many of our members their jobs and raise the cost of living on Nevadans on a fixed income and on citizens that are still struggling to make ends meet after years of a terrible recession.
—Danny Thompson of Nevada AFL-CIO, 
- Associated Builders and Contractors, Nevada Chapter
- Associated General Contractors, Nevada Chapter
- Associated General Contractors, Las Vegas Chapter
- Builders Association of Western Nevada (BAWN)
- Carson Valley Chamber of Commerce
- Economic Development Authority of Western Nevada (EDAWN)
- Elko Area Chamber of Commerce
- The Fallon Chamber of Commerce
- Financial and Intangible Assets Enterprises (FIAE)
- Las Vegas Metro Chamber of Commerce
- National Association of Industrial and Office Properties (NAIOP), Northern and Southern Nevada Chapters
- National Federation of Independent Business – Nevada
- Nevada AFL-CIO
- Nevada Association of Employers
- Nevada Farm Bureau Federation
- Nevada Manufacturers Association
- Nevada Mining Association
- Nevada Policy Research Institute
- Nevada Resort Association
- Nevada Restaurant Association
- Nevada Taxpayers Association
- Retail Association of Nevada
- Southern Nevada Homebuilders Association
- The Chamber of Reno, Sparks, and Northern Nevada
- Jim Murren, CEO of MGM
NO on 3: Coalition to Defeat the Margin Tax Initiative provided their fact sheet to argue against the initiative. The fact sheet included the following points:
- "Overall, it would dump a massive $750 million increase on the costs of doing business for Nevada employers. That would severely damage our state’s already struggling economy and job market."
- "Proponents claim that the $1 million gross revenues threshold protects small businesses. But in reality, the Margin Tax Initiative would hurt thousands of small businesses in Nevada that have total annual gross revenues of over $1 million but also have high overhead and very small profit margins – such as family-owned restaurants, medical clinics, daycare centers, repair shops, veterinarians, janitorial services, ranches, and farms."
- "The Margin Tax Initiative contains 84 sections of complicated legal and technical language that would create a logistical and legal nightmare for businesses to navigate."
- "In fact, for businesses, the Margin Tax Initiative would make Nevada one of the highest taxed states in which to operate. This would severely damage our state’s struggling economy, cause the loss of thousands of existing jobs and make it nearly impossible to attract new businesses and jobs to Nevada."
- "Even if the legislature decides that education should get more money through the Margin Tax, the initiative provides no plans or requirements to ensure that its revenues go to the classroom instead of into the hands of bureaucrats."
- "Nevada’s unemployment rate is still one of the highest in the nation and the Margin Tax Initiative would only make it worse. Large employers like gaming companies, banks, hospitals, and manufacturing companies would be forced to lay off workers, and many small businesses would be forced to downsize or close altogether."
- "The Margin Tax Initiative would impose a new 2% tax on revenues generated by almost all types of goods and services sold in Nevada, including: food, clothing and other retail store products; gas, electricity and telephone services; prescription medicines sold by pharmacies; and, medical care provided by doctors and hospitals. Ultimately, the providers of these goods and services would pass on some or all of their tax increase to Nevada consumers."
| Total campaign cash |
as of June 18, 2014
|PAC||Amount raised||Amount spent|
|Coalition to Defeat the Margin Tax Initiative||$2,259,594||$519,919|
Top 10 contributors:
|Nevada Resort Association||$571,000|
|Las Vegas Metro Chamber of Commerce||$487,000|
|Nevada Mining Association, Inc.||$225,000|
|Retail Association of Nevada||$175,000|
|Farmers Group, Inc.||$100,000|
|Nevada Franchise Auto Dealers Association||$87,331|
|Southern NV Franchised New Car & Truck Dealers Association||$25,000|
|Fletcher Jones Toyoto Scion||$20,000|
|AutoNation Buick GMC||$20,000|
- See also: Polls, 2014 ballot measures
|Nevada Question 3 (2014)|
|Poll||Support||Oppose||Undecided||Margin of Error||Sample Size|
|Public Opinion Strategies|
2/16/2013 - 2/18/2013
|Harstad Strategic Research|
9/18/2013 - 9/24/2013
|Note: The polls above may not reflect all polls that have been conducted in this race. Those displayed are a random sampling chosen by Ballotpedia staff. If you would like to nominate another poll for inclusion in the table, send an email to email@example.com|
Reports and analyses
Applied Analysis was hired by the Coalition to Defeat the Margin Tax to analyze Nevada Ballot Question #3. However, both opponents and supporters have cited the study as supporting their position. Applied Analysis stated their neutrality, saying, “Applied Analysis offers no opinion as to the policy merits of the proposed margin tax. Our task was not to determine whether the levy is “good” or “bad” or whether it is “needed” from a revenue sufficiency standpoint; rather, our sole focus is to estimate the approximate yield of the proposed margin tax and to evaluate its expected incidence on various sectors of the economy as well as various types of businesses.” The following is an excerpt from their findings summary:
—Applied Analysis, 
Nevada Policy Research Institute
Geoffrey Lawrence, deputy director of policy at the Nevada Policy Research Institute (NPRI), authored a comprehensive study of the proposed Nevada margin tax. In it, he took a closer look at how the Texas tax disproportionally affects certain industries within the state:
The study further examined the proposed margins tax in Nevada and the role it would play within the broad spectrum of tax reform. NPRI came to the conclusion that the tax would do the following:
—Geoffrey Lawrence of NPRI, 
The Executive Summary of the report went on to say, "A business margin tax in Texas — after which the unions' proposal is modeled — has been widely recognized as a tax-policy failure. In 2009 alone, Texas lawmakers heard more than 100 bills proposing to modify or repeal the tax. Nevada should look to import successful policies from other states — not failing ones."
Basing their information on a study by Billy Hamilton entitled, "Cosmetic Surgery for the Texas Margin Tax," an article compiled by the Tax Foundation stated:
Far from solving the problems of the previous corporate franchise tax, the margin tax seems to have only aggravated them. The tax was designed to reach businesses not reached by the corporate income tax, including partnerships, unprofitable businesses, and small businesses. As the tax was enacted, however, legislators expanded exclusions in the face of arguments that hefty tax compliance costs on small businesses were disproportionate.
—Tax Foundation, 
Path to the ballot
Proponents of the measure were required to collect and submit 72,324 valid signatures by November 13, 2012. According to Lynn Warne of the Nevada State Education Association, 150,000 signatures were collected. Since the measure was submitted as an indirect initiated state statute, it was first sent to the state legislature. The legislature had the opportunity to either approve the measure, thus keeping the initiative off the ballot, or ignore or defeat the measure, thus putting the initiative on the ballot. Voting down an initiative would have given the legislature the ability to offer a competing measure alongside the initiative.
In the legislature
The Nevada Legislature did not take action on the initiative within the forty-day limit, as prescribed by the Nevada Constitution. The constitution allows the governor or legislature to place a competing measure on the ballot, meaning that constituents would vote on two alternative measures and whichever one received the largest majority would be approved. However, the constitution appears to require that to place an alternative on the ballot, the legislature must first vote down the indirect initiative. Republicans in support of a competing measure said that no action was equivalent to a de facto rejection. However, the Nevada State Education Association claimed the opposite, that no action was not de facto rejection. Rick Combs, Director of the Legislative Counsel Bureau, said, “We don’t believe it’s an issue that has been decided before.”
The Nevada Secretary of State, in communication with the attorney general, determined that no action by the legislature did not equate to de facto rejection. Therefore, an alternative competing measure could not appear on the ballot.
- Nevada Secretary of State, "The Education Initiative," accessed May 1, 2014
- Las Vegas Review Journal, "Nevada AFL-CIO opposes proposed margins tax to fund public schools," May 2, 2014
- Las Vegas Review-Journal, "Tax plan has miles to go before it's passed," June 8, 2012
- NO on 3: Coalition to Defeat the Margin Tax Initiative
- Tax Foundation, "Nevada May Consider New Business Taxes," May 18, 2011
- The Education Initiative
- Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
- The Education Initiative, "Facts," accessed May 1, 2014
- Nevada State Education Association, "The Education Initiative," accessed May 1, 2014
- Nevada Secretary of State Campaign Finance Disclosure, "The Education Initiative PAC," accessed June 18, 2014
- Las Vegas Review-Journal, "Business margins tax on Nevada ballot could pit union against union," January 25, 2014
- RGJ, "'The Education Initiative' will be tough to beat by Nevada businesses, top politicians," March 25, 2014
- RGJ, "‘Game on’ in battle over Nevada margins tax vote," April 26, 2014
- Las Vegas Review-Journal, "Democratic lieutenant governor candidate Flores opposes proposed margins tax," April 27, 2014
- NO on 3: Coalition to Defeat the Margin Tax Initiative, "Who We Are," accessed May 1, 2014
- NO on 3: Coalition to Defeat the Margin Tax Initiative, "Information about the Margin Tax Initiative," accessed May 1, 2014
- Nevada Secretary of State Campaign Finance Disclosure, "Coalition to Defeat the Margin Tax Initiative," accessed June 6, 2014
- News 3, "Huge Jackson Commentary," May 1, 2014
- Las Vegas Sun, "How many jobs would be lost if Nevada margin tax passes? It depends," April 9, 2014
- Applied Analysis, "The Fiscal and Economic Impacts of Nevada Question #3," February 2014
- Nevada Policy Research Institute, "Facts and fiction about the unions tax initiative," June 27, 2012
- RGJ, "At bat Tuesday at the Nevada Legislature: Hearing on that 'dreaded' margins tax," February 28, 2013
- Las Vegas Sun, “OK, voters, margins tax ball is now in your court,” March 15, 2013
- Las Vegas Sun, “Teachers’ business-tax measure catches break on 2014 ballot,” April 2, 2013
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