Nevada Commerce Tax Repeal (2016)
| Nevada Commerce Tax Repeal | |
|---|---|
 | |
| Election date November 8, 2016 | |
| Topic Taxes | |
| Status Not on the ballot | |
| Type Referendum | Origin Citizens |
| Not on Ballot |
|---|
 |
| This measure was not put on an election ballot |
The Commerce Tax Repeal did not make the November 8, 2016, ballot in Nevada as a veto referendum.
A vote of disapproval of portions of Senate Bill 483 would have repealed a tax applied to any business in Nevada having gross annual revenues of more than $4 million. A vote of approval would have retained the tax and would not have allowed changes to be made to it except by public vote.
The tax, which was part of SB483 passed in spring 2015, was supported by Gov. Brian Sandoval (R) and a majority of the Nevada Legislature.[1][2]
Petitioners claimed that lawmakers passed the tax despite voters overwhelmingly rejecting a tax measure on the 2014 ballot, the Margin Tax for Public Schools Initiative, Question 3.[3]
Text of measure
Full text
The full text of the measure can be found here.
Fiscal impact
The fiscal impact statement of the measure, prepared by the Legislative Counsel Bureau's Fiscal Analysis Division on October 23, 2015, was as follows:[4]
| “ | The Referendum on the Provisions Related to the Commerce Tax from Senate Bill No. 483 of the 2015 Legislative Session petition (Referendum) proposes to seek voter approval or disapproval of the provisions related to the Commerce Tax in Senate Bill 483 of the 2015 Legislative Session, which was approved by the Legislature on June 1, 2015, and signed by the Governor on June 9, 2015.
Pursuant to Article 19, Section 1 of the Nevada Constitution, a referendum proposing to approve or disapprove any statute or resolution, or part thereof, enacted by the Legislature is to be submitted to the voters at the next succeeding election at which the question may be voted on by the registered voters of the entire state. If the majority of the voters approve the statute or resolution, it shall stand as the law of the state and may not be amended, annulled, repealed, set aside, suspended, or in any way made inoperative without a direct vote of the people. If the majority of the voters reject the statute or resolution, it becomes void and has no effect, effective upon the canvass of the votes by the Nevada Supreme Court. Pursuant to NRS 295.045, the question that would be placed on the ballot regarding approval or disapproval of the provisions related to the Commerce Tax in Senate Bill 483 of the 2015 Legislative Session would require the voter to decide whether he or she approves of the provisions related to the Commerce Tax. The Referendum would appear on the 2016 General Election ballot on November 8, 2016, if it qualifies for submission, and the result of the ballot question would become effective on November 22, 2016, pursuant to NRS 293.395, upon the canvass of the votes by the Nevada Supreme Court. The following provides a summary of the provisions related to the Commerce Tax approved by the Legislature and the Governor in Senate Bill 483 of the 2015 Session, as well as an explanation of the effect of the approval or disapproval of the Referendum. The Nevada Commerce Tax is a new tax that will be paid by certain businesses that have at least $4 million in Nevada gross revenue during a taxable year, based on their industry-specific tax rate. The first payment of the tax is due August 15, 2016, for the taxable year ending on June 30, 2016, and this payment will be recorded as State General Fund revenue for FY 2016 (July 1, 2015 – June 30, 2016). Beginning in Fiscal Year 2017 (July 1, 2016 – June 30, 2017), a business that pays the Nevada Commerce Tax may take a credit of up to 50 percent of the Commerce Tax paid for the previous fiscal year against the business’s Modified Business Tax liability in the current fiscal year. A vote to approve the provisions related to the Commerce Tax in Senate Bill 483 would require businesses who have at least $4 million in Nevada gross revenue during a taxable year to continue paying the Nevada Commerce Tax as required pursuant to current law and would allow businesses to continue receiving the credit of up to 50 percent of the Commerce Tax paid for the preceding fiscal year against the business’s Modified Business Tax liability in the current fiscal year. A vote to disapprove the provisions related to the Commerce Tax in Senate Bill 483 of the 2015 Session would repeal the provisions of the Commerce Tax, which eliminates this tax liability beginning with the taxable year ending on June 30, 2017. The credit of up to 50 percent of the Commerce Tax paid for the prior fiscal year against the Modified Business Tax liability in the current fiscal year would also be repealed effective with the Modified Business Tax payment due for the second quarter of Fiscal Year 2017 (October – December 2016), which would be paid on or before January 31, 2017. FINANCIAL IMPACT OF THE INITIATIVE If a majority of the voters approve the provisions of the Referendum, the provisions for the Commerce Tax and the credit for the Commerce Tax against the Modified Business Tax as approved in Senate Bill 483 would remain in effect, and the Referendum would result in no financial impact upon state or local government. If a majority of the voters disapprove of the provisions of the Referendum, the Fiscal Analysis Division estimates that the repeal of the provisions related to the Commerce Tax and the credit for the Commerce Tax against the Modified Business Tax would negatively impact the State General Fund budget, based on the estimates prepared during the 2015 Legislative Session, as follows: A net loss in State General Fund revenue of approximately $74.9 million in Fiscal Year 2017 (July 1, 2016 – June 30, 2017). The Commerce Tax would not be collected for FY 2017, resulting in an estimated loss of approximately $119.8 million. Businesses would no longer be able to take a credit for their Commerce Tax paid in FY 2016 against the last three quarters of their Modified Business Tax liability in FY 2017, resulting in an estimated gain in State General Fund revenue of approximately $44.9 million. A net loss in State General Fund revenue of approximately $59.9 million in Fiscal Year 2018 and all future fiscal years, based on an assumption of no growth in the Commerce Tax in Fiscal Year 2018 or future fiscal years The Commerce Tax would not be collected, resulting in an estimated loss of approximately $119.8 million per fiscal year. There would be no credit for the Commerce Tax paid in the preceding fiscal year against the Modified Business Tax liability in the current fiscal year, resulting in an estimated gain in State General Fund revenue of approximately $59.9 million per fiscal year. Based on information received from the Department of Taxation, the disapproval of the provisions of the Referendum would result in increased expenditures relating to administrative changes caused by the repeal of the provisions related to the Commerce Tax; however, the Department did not estimate the costs that would result from these administrative changes. The Department of Taxation additionally indicated that additional staff that was approved by the Legislature during the 2015 Session for administration of the Commerce Tax could be eliminated if the provisions of the Referendum are disapproved; however, the Department did not estimate the number of positions that could be eliminated, nor did it estimate the cost savings that could result from the elimination of these positions.[5] |
” |
Background
The commerce tax at issue was part of a tax plan that was passed in June 2015 that was designed to apply to Nevada businesses with over $4 million in annual revenue.[6]
Support
The campaign in support of the measure was a political action committee called RIP Commerce Tax Inc.[7]
Supporters
- Ron Knecht, Republican controller[8]
- Bob Beers , Las Vegas city councilman[8]
- Ed Goedhart, former Nevada assemblyman[8]
Opposition
The group leading opposition for the repeal was the Coalition for Nevada’s Future.[6]
Opponents
- Gov. Brian Sandoval (R)[8]
Arguments against
Gov. Sandoval said in a statement:[8]
| “ | Controller Ron Knecht, and others who are responsible for promoting this petition, owe it to Nevadans to explain exactly what education programs they will cut if this measure passes. Its passage will destroy a generational opportunity to finally modernize and improve an underperforming education system.[5] | ” |
Legal challenge
Lawyers representing the Coalition for Nevada's Future filed a legal challenge to the veto referendum, arguing that the language in the petition to repeal was misleading, violated the Nevada constitution and included administrative details. One of the lawyers, Matt Griffin, said,
| “ | In our opinion, we think it’s best that this does not qualify for the ballot. ... There’s obviously discussions and strategies around if and when scenarios, but right now our focus is predominantly upon preventing it from going to the voters.[5] | ” |
| —Matt Griffin[6] | ||
A district court ruled that the petition was legal and could move forward, but the plaintiff's appealed to the Nevada Supreme Court. Oral arguments were heard on May 2, 2016.[9]
On May 10, 2016, the Nevada Supreme Court rejected the gathered signatures on the basis that they were signed under false information. The justices ruled that the measure's summary on the signature-gathering material omitted language that would have informed potential signers that the measure could unbalance the state budget by over $10,000,000. Justice Nancy Saitta wrote a concurring opinion, saying:[10]
| “ | By ignoring the significant effect the referendum would have on the balanced budget mandate, the description of effect suggests that no such effect exists and is thus materially misleading. ... The petition’s signers have been both deceived and misled.[5] | ” |
Path to the ballot
Supporters needed to collect 55,234 valid signatures by June 21, 2016, to qualify the measure for the ballot. By May 25, 2016, campaign leaders said they could not meet the signature requirement following the setback and suspended the campaign.[11]
State profile
| Demographic data for Nevada | ||
|---|---|---|
| Nevada | U.S. | |
| Total population: | 2,883,758 | 316,515,021 |
| Land area (sq mi): | 109,781 | 3,531,905 |
| Race and ethnicity** | ||
| White: | 69% | 73.6% |
| Black/African American: | 8.4% | 12.6% |
| Asian: | 7.7% | 5.1% |
| Native American: | 1.1% | 0.8% |
| Pacific Islander: | 0.6% | 0.2% |
| Two or more: | 4.4% | 3% |
| Hispanic/Latino: | 27.5% | 17.1% |
| Education | ||
| High school graduation rate: | 85.1% | 86.7% |
| College graduation rate: | 23% | 29.8% |
| Income | ||
| Median household income: | $51,847 | $53,889 |
| Persons below poverty level: | 17.8% | 11.3% |
| Source: U.S. Census Bureau, "American Community Survey" (5-year estimates 2010-2015) Click here for more information on the 2020 census and here for more on its impact on the redistricting process in Nevada. **Note: Percentages for race and ethnicity may add up to more than 100 percent because respondents may report more than one race and the Hispanic/Latino ethnicity may be selected in conjunction with any race. Read more about race and ethnicity in the census here. | ||
Presidential voting pattern
- See also: Presidential voting trends in Nevada
Nevada voted for the Democratic candidate in four out of the seven presidential elections between 2000 and 2024.
More Nevada coverage on Ballotpedia
- Elections in Nevada
- United States congressional delegations from Nevada
- Public policy in Nevada
- Endorsers in Nevada
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- More...
See also
Footnotes
- ↑ Nevada Secretary of State', "Referendum Petition," accessed December 8, 2015
- ↑ Reno Gazette-Journal, "Group files petition to repeal new Nevada Commerce Tax," October 16, 2015
- ↑ Washington Times, "Defenders of Nevada Commerce Tax challenge repeal effort," October 29, 2015
- ↑ Nevada Secretary of State, "Financial Impact Statement," accessed December 8, 2015
- ↑ 5.0 5.1 5.2 5.3 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ 6.0 6.1 6.2 Las Vegas Sun, "Opponents of Nevada tax increase forging ahead in repeal effort," January 29, 2016
- ↑ Nevada Secretary of State, "State of Nevada Committee for Political Action (PAC) Registration Form," accessed December 8, 2015
- ↑ 8.0 8.1 8.2 8.3 8.4 Washington Times, "Group files petition to repeal new Nevada Commerce Tax," October 12, 2015
- ↑ Las Vegas Sun, "Court to hear arguments on commerce tax referendum," April 20, 2016
- ↑ Nevada Appeal, "Nevada High court deals major setback to commerce tax repeal effort," May 11, 2016
- ↑ Las Vegas Sun, "Group drops effort to repeal commerce tax on ballot," May 25, 2016
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