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Letter


NTU Urges Nevada Governor to Repeal 2003 Tax Increase

January 28, 2005

The Honorable Kenny Guinn
Governor of Nevada
101 North Carson Street
Carson City, NV 89701

Dear Governor Guinn:

On behalf of the more than 2,700 members of the National Taxpayers Union (NTU) in Nevada, I urge you to take bold measures -- like advocating repeal of the 2003 tax increase -- in your efforts to stem the brewing tax revolt in your state. As you rightly indicated in the Reno Gazette-Journal, there is a great deal of frustration and anger among Nevadans over taxes and the sheer amount of new revenues the state government is accumulating.

The root of the problem and the cause of the grassroots anger is the 2003 tax hike package, which boosted cigarette, alcohol, and business license taxes, imposed an amusement tax, and increased property taxes. That tax hike also included a 0.25 percent gross receipts tax to be levied in July 2005 on income of more than $450,000 received by a company. Although this plan was originally designed to raise $800 million over a two-year budget -- the largest tax increase in state history -- the rebounding national economy has helped raise new tax revenues by $1.7 billion.

In a recent policy analysis, Nevada Policy Research Institute detailed the flawed economic assumptions that were used to support the 2003 tax increase. In their report, the authors argue persuasively that some government belt-tightening could have obviated any need for higher taxes. For example: had the legislature held FY 2004 general fund spending to FY 2003 appropriation levels, after adjustment for inflation and population increases, the FY 2004 budget would have generated a modest surplus for the year without any tax increase! Also, the official budget systematically overstated revenue needs. For example, the TANF (Temporary Assistance for Needy Families) caseload is currently 42 percent below the original estimate.

Although it may have seemed necessary to some officials at the time, in reality this tax increase never should have been enacted, and the best thing for taxpayers would be to repeal it immediately. While taxpayers will undoubtedly appreciate any amount of their money that they can get back from the government, including the more than $300 million in sales and gaming revenues you have proposed, fairness dictates a more aggressive plan.

NTU and our members look forward to working with you to return to taxpayers the money that is rightfully theirs. We recognize that some in the Legislature may resist such an initiative, but with your leadership, we are confident that we can win.

Sincerely,

Paul J. Gessing
Director of Government Affairs