Presentation Transcript

1. KEY FACTS ABOUT THE MARGIN TAX INITIATIVE (QUESTION 3) StopTheMarginTax.com NAIOP Presentation June 6, 2014
2. About the Margin Tax Initiative (Question 3) Question 3 is a ballot initiative that will be on the NV general election ballot in November New 2% business tax on GROSS revenue Businesses with more than $1 million in annual gross revenue would have to pay Would have to pay EVEN in years with no profit Equivalent of an almost 15% corporate income tax – higher than CA
3. About the Margin Tax Initiative (Question 3) Businesses with more than $1 million in annual gross revenue would have to pay Creates a “fiscal cliff” for businesses Businesses that gross one penny more than $1 million would pay the 2% Margin Tax based on the entire million Businesses could ONLY deduct Modified Business Tax (MBT) liability plus one of three deductions: Cost of goods sold Costs of employee compensation (up to $300K/employee) Standard 30% deduction
4. About the Margin Tax Initiative (Question 3) NO guarantee of more money for education Legislature would have complete authority to divert funds Legislature has history of diverting funds designated for education (ex. 2009 room tax diversion) NO plan for how any funds going to education would be spent Initiative provides no plans or requirements to ensure that revenues go to classroom instead of the hands of bureaucrats
5. About the Margin Tax Initiative (Question 3) Gigantic tax increase by anyone’s standards Proponents original estimate: $800 million/year Guinn Center estimate: $460 million/year Applied Analysis estimate: $650-$750 million/year
6. About the Margin Tax Initiative (Question 3) For businesses, would make NV one of the five highest taxed states in which to operate Although 87% of NV businesses would be exempt from directly paying the tax, 80% of NV businesses are considered micro-businesses, meaning they do not employ anyone The vast majority of job-generating businesses in NV would be subject to the tax. Thousands of small businesses would NOT be exempt
7. About the Margin Tax Initiative (Question 3) 8,860 jobs when indirect impacts included $413 million in reduced labor income when indirect impacts are included A total of $1.1 billion in reduced economic activity when “ripple” effects are considered According to Applied Analysis, the effects of the Margin Tax Initiative translates to:
8. About the Margin Tax Initiative (Question 3) Initiative would increase consumer costs Would impose the new tax on almost all types of goods and services sold including: Food, clothing, gas, electricity, telephone services, prescription medicines, childcare and medical care Ultimately, some or all of the increased costs would be passed on to Nevada consumers.
9. Anticipated impact on real estate industry Rents, reimbursements and commissions would be subject to the Margin Tax Initiative Reimbursement expenses, such as common area maintenance fees would likely be included in total revenue Would both a broker and an agent, if both exceed the $1 M threshold, be subject to the proposed Margin Tax? The initiative does specifically exempt “pass-through” revenue, revenue received by a business entity solely on behalf of another This provision would likely limit double taxation
10. Anticipated impact on real estate industry (cont.) Real estate industry is expected to bear a significant share of the incremental tax burden if the Margin Tax Initiative passes Current figures: Estimated modified business (payroll) tax payments: $7.4 million If the Margin Tax Initiative passes: Net taxable business receipts: $6.9 billion Gross business tax liability: $69.7 million After deducting MBT: $62.2 million
11. Anticipated impact on real estate industry (cont.) This is a preliminary draft document. It is subject to material review and revision.
12. Who has joined the Coalition? National Federation of Independent Business – Nevada Nevada Association of Employers Nevada Farm Bureau Federation Nevada Manufacturers Association Nevada Mining Association Nevada Resort Association Nevada Restaurant Association Nevada Taxpayers Association Retail Association of Nevada Southern Nevada Homebuilders Association Nevada Association of REALTORS Dayton Chamber of Commerce Associated Builders and Contractors, Nevada Chapter Associated General Contractors, Las Vegas Chapter Associated General Contractors, Nevada Chapter Builders Association of Western Nevada (BAWN) Carson Valley Chamber of Commerce Economic Development Authority of Western Nevada (EDAWN) Elko Area Chamber of Commerce The Fallon Chamber of Commerce Las Vegas MetroChamberofCommerce The Chamber of Reno, Sparks, and Northern Nevada Churchill Economic Development Authority Carson City Chamber of Commerce
13. What is being done to oppose the Margin Tax? Coalition formed representing thousands of small and large businesses, groups and individuals citizens Actively soliciting coalition members and presenting to groups Here’s how you join: StopTheMarginTax.com News items, analysis, fact sheets, Facebook & Twitter links, sign up and donation forms, etc. Launched social media and e-newsletter March 20th
14. Get Involved Join our coalition Make a contribution “Like” us on Facebook and follow us on Twitter @stopmargintax – use our hashtags: #StopMarginTax, #NO on 3 and #NOon3NV Forward our e-newsletter to friends, family and colleagues Retweet our Twitter posts and “share” our Facebook posts
15. Get Involved Utilize our online “tool kit” for employers Break room flyer Campaign Brochure Contribution Form Frequently Asked Questions Coalition Sign Up Form Letter to Editor Guidelines Link to Us Talking Points What Your Business Can Do What Your Organization Can Do

16. Discussion & QuestionsStopTheMarginTax.com