Nevada Assemblywoman Peggy Pierce’s bill (A.B. 428) was heard before the Assembly Taxation Committee yesterday morning, in hopes that at least a portion of Nevada’s budget shortfall might be filled by new revenues created in the provisions of this bill. The bill is designed to reduce tax deductions that mining has enjoyed for decades.
The Nevada Constitution is said to have been written by the mining industry, with major protections for themselves included. Essentially, the mining industry is only taxed on their net proceeds in an amount no greater than 5%. While there is currently a proposal before the legislature to amend the Nevada Constitution to remove the cap, such a provision, if passed, would have to be revisited by the legislature in two years, and passed by voters on the ballot, yielding results no sooner than 2014.
Some Assembly Democrats are hoping that AB 428 might be a more immediate fix for the budget problems. Proponents testified on behalf of the bill before the committee this morning.
Hugh Jackson, of Las Vegas Gleaner fame, outlined the enormous record profits being made by the mining industry, thanks in large part to gold. He points out that the net income of mining is greater than Nevada’s entire state budget. They distributed $1.1 billion in dividends last year, and are sitting on $8 billion in cash.
He explained that Barrick and Newmont (NV’s 2 largest mining companies) aren’t likely to leave Nevada because their dividends of $1.1 billion are reduced to $1 billion (a difference reflected by the impact of this bill)
“Market Forces drive where mining operates, when it expands, and how many people it employs. Nevada is probably the most important region in the world for mining. This bill, if passed, will still leave Nevada’s mining taxes lower than nearly anywhere else in the world. It is hard to imagine this having any effect on the industry.”
Michael Ginsburg with the Progressive Leadership Alliance of Nevada, agreed, saying, “The idea that mining will leave Nevada due to a tax increase is farcical and absurd.”
Mining lobbyists countered with two points they claim are their only objections to this bill. First, they say it targets only one industry, and only exacerbates the nature of Nevada’s budget surplus/deficit cycle. Mining nearly came out and said they were in favor of a gross receipts broad-based business tax, though that is a convenient position to take since the likelihood of such a tax is minuscule.
They also raised concerns, via high powered attorneys from Jones Vargas, that the bill may be unconstitutional because it artificially raises the value of the minerals being taxed. In other words, because the Nevada Constitution only allows net proceeds to be taxed, these deductions are arguably required constitutionally. We should note at this point that Nevada’s governor is a partner with Jones Vargas, and thus profiting personally by these lobbying efforts. Wow! Yes, but just a microcosm of Nevada politics.
The problem with mining’s first assertion is that industries everywhere that receive special privileges (the ability to do damage to land, or people for profit) are targeted by extra taxes. Tobacco and alcohol are two easy examples. The “harm” these industries do to society is considered justification for why a tax is an appropriate compensation to the society, paid by the ones profiting from the harm.
Mining certainly does harm to the environment, and they are shipping non-renewable resources out of the state. That is a special privilege. They should be willing to pay extra. Hey, even those commie pinkos in Texas have targeted the oil industry, which is a primary reason that the University of Texas enjoys one of the largest endowments in the world. Wyoming (another socialist pariah) also targets hefty taxes on mining that are a great deal higher than here in Nevada.