Business and the Teacher's Income Tax: No Compromise

As I predicted in my September 24th column, the gambling industry has come out in favor of the teachers union sponsored income tax, the so-called "excess profits tax" to be levied against all businesses in Nevada. Asked about the official position of the gamblers, hired gun Harvey Whittemore was blunt and non-evasive: "Does gaming want it [the tax increase]? The answer is yes."
While several influential lawmakers in recent weeks have come out in opposition, and Chamber of Commerces and small businesses around the State prepare to fight, the two big money brokers- buyers of legislators -- are now officially in favor. The unions and the casinos

have spoken loud and clear -- it's time to tax.
The potential showdown is huge, although the anti-income-tax people have a serious handicap. In politics money counts most, and big labor and the Steve Wynns of Nevada give generously. Of course, such acts are not given without reason. Wynn has literally reaped millions by investing thousands, and purchased politicians, bought off by labor and its theoretical but not actual opponents, the big casino owners, do as their paymasters demand. An excellent example was the passage of the sales tax increase, passed in the face of outraged opposition from the people.
To expand taxes on small businesses is certainly counterproductive to the alleged goal of diversifying Nevada's one horse economy -- especially with Indian gaming threatening to maim our only horse.
But the way the game is played is rarely an all or nothing proposal, and Whittemore opened the fight with a not too subtle hint: "gaming is willing to negotiate when others step up to the plate."" Translation: Gambling has borne the

 
burden in the past, and projections of future state needs are showing red ink. The gamblers, fearful of a potentially successful statewide tax petition aimed at their gross profits, especially likely if Nevada's economy stalls and sputters, want to spread the burden around now.
A compromise will be the result, a foot in the door to future tax increases. The Teacher union's actual proposal will not pass as presented, but the meat of it will be enacted, with both sides claiming victory- a pyhhric victory for the taxpayer, to be sure.
It will work something like this: Big labor and the casinos will go in full bore, demanding complete passage of the income tax. The rest of the business community will fight back, and the legislators, loath to upset the ordinary citizen, who will see the idea as excessive, but even more fearful of the big money boys throwing their financial weight to their opponents, will work towards the middle, a "compromise."
If a thief broke into your home and carted off your guns, T.V.s, VCRs, furniture, fine china and silverware, and, when caught, offered a compromise, to give back, say, half of what he took, would you take it?
Most immediately see such a compromise

as a rip-off. But it was all mine to begin with! Why would I compromise? Well, look buddy -- the thief could have got it all; be glad for such a deal!
Yes, a legislative compromise will be about the same scenario. The unions and casinos want it all, the legislators cut it in, maybe, half, and you get stuck with higher taxes. Why, you should be happy! We saved you tons of money, when you see what they originally wanted!
With the new business income tax there must be a collection mechanism -- a state IRS, busy as bees snooping through your personal papers, your checkbooks, your payroll slips, your accounts and bank records. Every business, from a high schooler's lawn mowing service to Mom and Pop outfits to huge employers will have to prove their income and hence tax burdens to these new inquisitor bureaucrats.
Of course, the tax burden will start small, probably 1%-2% of profits above $50,000. The burden to prove such levels will fall on you of course, but for most, an inconvenience, not a catastrophe.
A look at tax history will show a similar belief and attitude allowed the 16th amendment, the national income tax, to pass into law. Sold to the people by such masterful orators