Reluctance to tax? Where?

Nevada’s tax burden ranks in the top half of states

By Geoffrey Lawrence
  • Monday, May 3, 2010

Contrary to what William Epstein and William Thompson of UNLV assert in their May 2 Las Vegas Review-Journal opinion column, there is no shortage of tax revenue in the Silver State. Politicians and others who would have us believe this fiction are guilty of distorting the image of Nevada’s fiscal structure in order to serve a crass political agenda.

To make their case, Epstein and Thompson point to a report from the left-leaning Tax Policy Center, claiming that the State of Nevada eight years ago made the “43th (sic) weakest effort to provide revenues for public services.” However, when comparing tax burdens across states, one must be careful to compare apples to apples, which is not what Epstein and Thompson have done.




The Silver State is unique in that, as a highly metropolitan state with far-flung population centers, it historically has seen the most efficient course to be concentrating services at the local, rather than the state, level. Hence, while Nevada’s state government spends relatively little on a per capita basis, local government spending far outpaces that of other states, proportionately.




In order to make an apples-to-apples comparison, one must account for tax revenues generated by state and local governments combined within the states. This measurement accurately reflects the total tax burden and the relative size of government across the states.




If Epstein and Thompson had been more thorough in their analysis they would have noted that the Tax Policy Center — the very same source that they cite — has calculated this measurement and disproven the notion that Nevada is a low-tax state. For 2007, the last year for which data is available, the Center notes that state and local general revenues amounted to $5,984 for every man, woman and child in Nevada — the 22nd highest amount in the nation.




Clearly, there has been no reluctance to tax in the Silver State, as Epstein and Thompson would have us believe. Instead, Nevada’s total tax burden is higher than more than half the states.




Is it simply that Epstein and Thompson would like government services to be more centralized at the state level? And does it have anything to do with the fact that, as employees of the Nevada System of Higher Education, their salaries come, in significant part, from state tax revenues?

“But wait,” the professors will claim, “the number of government employees per capita is lower in Nevada than in other states. Surely, that proves our governments are under-funded.” Not so: Nevada, as a state, has simply chosen to pay public employees more than have other states. Data from the US Census Bureau shows that public employees in Nevada are the sixth highest paid among the states. Even states with dramatically higher costs of living, such as Hawaii, Maryland and Massachusetts, do not pay public employees as highly as does Nevada. 

In fact, the Las Vegas Chamber of Commerce has recently shown that public employees in Nevada make, on average, 28.1 percent more than private sector workers in similar job classifications — even without accounting for the exorbitant difference in benefits.

Epstein and Thompson further claim that Nevadans are unwilling to fund public education. The truth is that Nevada’s public universities have the fifth-lowest in-state tuition rates in the nation, according to The Education Trust. Indeed, the high degree of taxpayer subsidy of UNLV and other NSHE institutions has most likely damaged higher education in the state — pricing higher-quality private universities out of the Southern Nevada marketplace and preventing their competition from raising the performance bar. Those government-awarded taxpayer subsidies keep NSHE’s sub-par monopoly protected and in place — and competitors out.


Remarkably, after having asserted the moral degradation of private sector gaming, the professors then hypocritically propose a state-run lottery as one “solution” for the “revenue problems” they erroneously posit. Yet, nearly every study on the effectiveness of state-run lotteries as a revenue source reveals them to be volatile, regressive and inefficient. Just one example is the Nevada Legislature’s famed 1988 Price Waterhouse study, which says, “A state-run lottery fails every test of a ‘good’ tax policy. In Nevada, gaming should be left to the private sector.”

If the unwashed masses of the Silver State really need “Foreign Legionnaires” to control and boss them around, as Epstein and Thompson snidely suggest, then, at a minimum, those Legionnaires should be honest and well-informed. Epstein and Thompson fail at least one of those standards.

Geoffrey Lawrence is a fiscal policy analyst at the Nevada Policy Research Institute.


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