ELKO — A proposed tax will cost Nevadan jobs and won’t necessarily help the schools its designed to fund, said opponents of the margin tax on Thursday.
The Elko Area Chamber of Commerce’s Government Affairs Committee organized a public forum to discuss the margin tax — also called “The Education Initiative” and “Question 3” — which would place a 2 percent tax on the gross revenue of businesses that generate more than $1 million in annual revenue.
Voters will decide at the ballot in November whether the tax is implemented. Until then, sides arguing for and against the bill are trying to rally supporters.
The chamber invited Manny Martinez and Jerry O’Driscoll, directors of Reno-based NV Jobs PAC — a political action committee formed for the purpose of defeating the margin tax — to share their thoughts with forum attendees, an audience of about 20 people.
O’Driscoll said profit margins for many businesses, even those grossing more than $1 million, aren’t substantial. A trucking company with a fleet of five semis, he said for example, that collects $2 million might only profit $100,000 after factoring in gas, maintenance costs, employee salaries and benefits and other miscellaneous expenses.
Apply the margin tax to the calculation, and that profit drops to $72,000.
“A seemingly small tax on the gross revenue of the business translates into a very high tax on its profits,” O’Driscoll said.
In the trucking company scenario, O’Driscoll imagined the profit is split between two owners who now bring home less money than they pay their truck drivers, and they’re forced to lay off a receptionist.
The $1 million threshold of gross sales, NV Jobs PAC representatives said, is a mark many businesses hit.
If passed, money generated from the tax will go into Nevada’s distributive school account, which is dispersed to school districts.
Historically, O’Driscoll said, when state lawmakers earmarked tax money, they decided to allocate less money from other revenue sources — resulting in a wash to education funding.
Martinez said supporters of the tax were “playing on the sympathies” of people with legitimate concerns that education funding is vital.
Brian Zeiszler, a local educator who said he’s on the fence regarding the initiative, cautioned against “teacher bashing” when discussing the tax.
Matt McCarty, GAC chairman, agreed.
In its opposition to the tax, he said, the business community wasn’t aiming to create a rift between themselves and teachers. McCarty said he met with representatives from three local education unions to address that point.
“We understand as a Chamber that we need an educated workforce,” he said.
McCarty said businesses would perhaps be willing to pay a “fair tax,” but added that the margin tax wasn’t.
Zeiszler encouraged the businesses to help put pressure on the Legislature to ensure education is funded to levels that it needs to be.
“I think a lot of teachers who are right now on the edge of voting one way or the other, we still haven’t heard an alternative from the business community,” he said.
The forum was at Stockmen’s Hotel & Casino and sponsored by Ruby Mountain HVAC.
The tax is supported by the Nevada State Education Association, which helped raise signatures to put the measure on the ballot. It was also originally backed by the Nevada AFL-CIO, but members later voted not to support the tax for fear that it members could lose their jobs, according to the Las-Vegas Review Journal.
Supporters expect the tax — which is on 70 percent of total revenue, or total revenue minus salaries, or total revenue minus “cost of goods” — will generate substantial funds for education.
“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,” the Education Association’s website states.