The Margin Tax

Free access to high quality public education is the key to retaining America’s leading position in the world and will be a critical component of the region’s efforts to diversify our economy. The State of Nevada should do everything it can to properly fund and support the highest quality education we can afford for our children.

As a technology focused company we have the opportunity to partner with many local organizations that need the same highly educated workforce, and we see firsthand the lack of qualified candidates. Also, with the latest announcements of new companies coming to the area, high quality education will be even more important.

By now many of you have heard both sides arguing about Question 3, the Education Initiative, also known as the Margin Tax. This tax will go before the voters in a few weeks, and if passed, will levy a tax on all businesses that have over $1 million in revenue.

While this may sound like a good way to fund education and a fair way to have the state’s largest businesses support this important goal, it is neither. The details of how the tax will be levied and how the money would be allocated can be found in many places and I would like to cover a couple of them here.

  1. The Education Initiative would provide no guarantee for increased funding to support education. This is simply because the state defines the current education funding, and while any proceeds from this tax would be directed to fund education, the state would still retain the authority to add or remove other funding sources as they see fit, resulting in no guaranteed increase to education funding.
  2. The Margin Tax would levy a tax on businesses with revenues of over $1,000,000 annually with no consideration on profitability or margin. In this case a business with $1,000,000 in revenue would pay the tax while one with $999,000 in revenue pays no tax. This is clearly a flawed formula that does not exempt the first $1,000,000, thus penalizing and creating unfair competition and an unbalanced cost of doing business between small firms.
  3. The Margins Tax was created by special interests groups as a way to get more tax revenue for education. The Legislature’s inaction in their last session has now forced the question to the ballot. This inability of our elected officials to do their job is not a valid reason to pass this flawed measure, and doing so would negatively impact the Nevada economy at a critical time.

Nevada needs an education initiative that is supported by all interests in the state. Every business I talk to wants better education and does not mind paying for it, but this tax initiative is poorly designed and is unsupportable. Make sure you understand both sides before casting your vote.

While I do not support the Margins Tax, I would urge a vote for legislators that are willing to get to work on supporting education by making the difficult decisions on spending, budgeting and taxes so that our economy can grow and continue to diversify in this rapidly changing world.