State of the Week: NEVADA

By at 1 June, 2017, 12:21 pm

by Raymond J. Keating-

Small Business Policy Index 2017: Nevada ranked best among the 50 states.

SBE Council’s “Small Business Policy Index 2017” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2016: Nevada ranked second best among the 50 states.

SBE Council’s “Small Business Tax Index 2016” ranks the states according to 25 different tax measures. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

A Tax Break for Nevada Small Businesses?

Nevada offers the very best policy environment among the 50 states, according to the “Small Business Policy Index 2017.” For good measure, Nevada ranks second best on the “Small Business Tax Index 2016.”

The big plusses for Nevada are that it imposes no personal, individual capital gains, corporate income, corporate capital gains and death taxes, and has a fairly low property tax burden.

Details on Nevada’s two-year budget are just now getting seriously fleshed out with major state budget bills being introduced. Heading into these budget discussions, there were reports that tax revenues are running ahead of expectations. What does that potentially mean?

As the Reno Gazette-Journal noted:

That means businesses that pay the state’s Modified Business Tax (payroll tax) are in for a tax break, Assembly Minority Floor Leader Paul Anderson, R-Las Vegas, said.

“Every business that has an employee, they will see a deduction in their Modified Business Tax,” Anderson said at Wednesday’s RGJ-sponsored Battle Born Politics gathering.

In 2015, when lawmakers passed the largest tax hike ($1.4 billion) in state history, they included a provision to lower the tax rates if tax collections got too hot, Anderson told the crowd at Midtown Reno’s Craft Wine and Beer Bar on Martin Street.

Later, Anderson pointed out, “We want to make sure we have a rainy-day fund and a healthy ending-fund balance. But we didn’t want a windfall for the government to just spend frivolously. And so we put a cap in there to make sure it would buy down and keep that at a managed level.”

Clearly, the 2015 Nevada tax hike was a mistake, including the imposition of a gross receipts tax. Indeed, one of the few major negatives in Nevada is that it imposes a heavy consumption-based tax burden, ranking second highest among the states. However, at least, some limit was placed on revenue growth, thereby limiting some of the damage of a major tax hike.

In the end, though, the combination of Nevada’s lack of any income-based taxes, no death tax, and relatively low property taxes, along with at least some kind of revenue cap on its Modified Business Tax, makes for a pro-entrepreneur, pro-small business, pro-growth tax system.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.


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