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1 Joseph Henchman, Nevada Panel considering Tax Reform Options, including New Business Taxes 1 (2010)

handle is hein.taxfoundation/ffcdfxz0001 and id is 1 raw text is: July 13, 2010 No. 235 Nevada Panel Considering Tax Reform Options, Including New Business Taxes Bj Joseph Henchman Introduction Every state that manages without a personal or corporate income tax routinely confronts calls to make it easier for the state to raise revenue by enacting an income tax. As Nevada confronts the latest periodic call to enact a corporate income tax, state legislators have funded a study of the state's tax system. The 25-member panel and its contractor have explicitly been instructed to review proposals for broad-based business taxes. Fiscal reform is expected to be a major topic for the Silver State in 2011. Among the options under consideration, and critiqued in a new report by the Nevada Policy Research Institute, One Sound State. Ovzce Igaz , are corporate income taxes, gross receipts taxes, and a broadened sales tax.! The state should be careful about its options, as its ability to attract investment and capital depends greatly on its favorable tax climate. Corporate Income Taxes are Not Less Volatile than Other Taxes As the Nevada Policy Research Institute notes in a new report, One Sound State, Once Again, a corporate income tax is not a good choice if revenue stability is the goal. As the table below shows, corporate income taxes have proven to be the most volatile of the major taxes, as measured b ar-over-ear revenue changes in revenue (see Table 1).2 From this data, one can compare volatility by looking at the standard deviation. The standard deviation measures how spread out the percentage change numbers are or, in Table 1: Year-to-Year Changes in State Tax Revenue in the U.S., As a Percentage of Previous Year, Fiscal Years 2000-09 (in real terms) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total Taxes +4.3 +0.9 -6 +0.3 +4.9 +6.1 +6.4 +2.8 -0.7 -8.5 Property Taxes -9.1 -8.1 -8.8 +5.4 +6.1 -4.1 +4.8 -0.1 -3.3 4.1 General Sales Taxes +2.6 0 -1.4 +0.5 +4.3 +4.0 +4.4 +0.9 -2.7 -5.0 Excise Taxes +0.2 -1.5 +3.4 +5.3 +4.0 + 1.1 +5.1 +2.7 -1.2 -2.3 Individual Income Taxes + 8.6 + 3.9 -13 -4.3 + 5.3 + 8.5 + 7.1 + 5.1 + 0.9 -12.1 Corporation Income Taxes +2.2 -5.4 -24.7 +9.9 +3.7 +21.3 + 17.2 +8.0 -8.0 -22.6 Source: Data from U.S. Census Bureau and Bureau of Labor Statistics. Joseph Henchman is Tax Counsel and Director of State Projects at the Tax Foundation. SATION

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