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1 Jared Walczak, Nevada Approves New Tax on Business Gross Receipts 1 (2015)

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TAxO
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June 2015
No. 467


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Nevada Approves New Tax on Business

Gross Receipts

By  Jared  Walczak
    Policy Analyst



Key  Findings
    On May  31, the Nevada Legislature approved the Nevada  Revenue  Plan, a
    package of tax changes championed  by Governor  Brian Sandoval (R) which
    includes $1.4 billion in new and extended taxes over the biennium.

    The Nevada  Revenue  Plan increases the corporation annual business
    fee, expands the payroll tax, raises the cigarette tax, and creates a new
    Commerce   Tax on the gross receipts of businesses with at least $4 million
    in revenue in Nevada.

    The plan also makes temporary payroll tax and sales tax increases
    permanent.

    The package won  substantial backing despite reservations regarding the
    package's structure, particularly the gross receipts-based Commerce Tax
    component.

    The new Commerce Tax imposes differential-rate  gross receipts taxes
    based on 26 business categories, with a partial credit against the payroll
    tax (known as the Modified Business Tax) for tax payments under the
    Commerce   Tax.

    Public finance scholars tend to look upon gross receipts taxes unfavorably
    because they are non-neutral, lead to tax pyramiding, and distort business
    decision-making.

    Through separate legislation, Nevada lawmakers also broadened  the base
    and lowered the rate of the Live Entertainment Tax, greatly reducing the
    tax's complexity.

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