Henderson Chamber opposes ‘Margin Tax,’ Question 3

No guarantee money slated for education would land in educators’ hands

HENDERSON, Nev. – The Henderson Chamber of Commerce recently surveyed its membership regarding the proposed Margin Tax, or Question No. 3, on the November ballot and received an “overwhelming response” in opposition, said Scott Muelrath, president and CEO of the Henderson Chamber of Commerce.

The Henderson Chamber of Commerce’s largest concern is the margin tax’s murky language, where many questions still remain unanswered.

According to state law, funds created by the margin tax and placed in the account cannot be used for anything but education; however, the concern is the funds won’t find their way directly to classrooms, where they are most needed. It is possible the money raised by the margin tax could fail to cause an increase in Nevada education spending and instead could pave the way for current state education funds to be reallocated toward non-educational budget items.

“It’s a poorly worded initiative that has no accountability, and there’s no guarantee the money would increase the educational budget in individual schools and classrooms,” Muelrath said. “The HCC is aware of both local businesses and businesses that are considering relocating here that will either move their operations from the state or opt to pass over Nevada if this initiative passes. It’s a disincentive for businesses to relocate or expand in Southern Nevada.”

Among the business community, the tax is widely expected to cripple employers and hinder businesses’ expansion efforts. Also, out-of-state companies may avoid relocation to Nevada because of the new tax climate. Currently, the City of Henderson’s economic development division has been able to list Nevada’s business-friendly tax environment as a strong reason for why businesses should relocate or expand to Nevada.

What is bad for business owners is bad for consumers and the local economy, Muelrath added.

“Even if the money goes to ‘education,’ it is unclear that any of it will make it to a classroom,” said Aviva Gordon, a lawyer with Ellis and Gordon and business owner. Even if the money is, indeed, earmarked for education, there’s no guarantee it will increase education funding, as opposed to replacing funding that can then, through legalities, go toward something else entirely.

“As a business owner, to be taxed upon gross receipts, not profits, will destroy businesses. Regardless of the degree of profit – or lack thereof – the tax is oppressive,” Gordon said.

Natalie Mungo, owner of three Jimmy John’s franchises in Henderson, admittedly is in a “state of panic” regarding the initiative.

“Not only will my costs rise, by my suppliers’ costs will also increase. Their costs will become my costs, and ultimately, become the consumers’ costs,” she said. “If a decision is made to not pass costs to the consumer, then I will have to make the choice to reduce staffing at my stores.”

To Robert Tzall, general counsel for Lake Industries, education is important, but this initiative is all about the numbers. Any company, even sole proprietorships, with more than $1 million in sales – including entrepreneurs, neighborhood businesses, family businesses and multinational corporations – will be subject to this tax, Tzall said.

“If the Margin Tax passes in November, Nevada will overnight become one of the most expensive places to operate a business in the country with a tax equivalent to a 15 percent corporate tax,” Tzall said.

To find out more about the business community’s opposition to Question No. 3, visit stopthemargintax.org or attend the chamber’s Tuesday, Oct. 14, networking breakfast featuring guest speaker Sen. Michael Roberson, who will discuss what business owners need to know before voting in November. For more details on this event, visit hendersonchamber.com.

The Henderson Chamber of Commerce is a nonprofit, professional organization committed to promoting and supporting member businesses.

For more information about the Henderson Chamber of Commerce, call 702-565-8951 or visit hendersonchamber.com.