I am responding on behalf
of Sen. Neal. Nevada has no such law. You are not the first
to ask this question. Following, you will find my response,
prepared in consultation with Sen. Neal, which went to someone
at what appears to be a Texas (or is that Baja Oklahoma?)
educational institution. I strongly recommend that you use
the search engines at this site and at Nevada
Labor to flesh out your research. At Nevada Labor, I
especially direct your attention to the Casinos
Out of Politics section.
You will not find much
to bolster your case from this quarter. The gambling industry
has long been the nemesis of Nevada education, recently
adopting a strategy of scapegoating non-gaming business
for the fact that the state stands in increasingly poor
financial condition. Indeed, industry leaders have even
accused some businesses of paying no taxes at all. Their
latest strategy is to blame the state's anemic economic
diversification efforts for bringing in non-taxed businesses.
That fraudulent assertion
and more were soundly refuted by a Nevada Commission on
Economic Development study which you may access from the
front page of this website. You will also find it among
a group of recent analyses posted with the text
of a speech by Sen. Neal.
The state study represents
the first-ever "smoking gun" evidence, which definitively
demonstrates that gambling in Nevada does not pay its fair
share of taxes.
The industry does not
really care about supporting either education or economic
diversification. It wants no competition for our large,
undereducated, low-wage labor pool. Please see my column
3, 1999 and a number of other items accessible through
the search engines.
You would do well to
keep Whittier (Calif.) College Prof.
I. Nelson Rose's comment in mind when suggesting expansion
of gambling: "When gambling is everywhere, it will
be nowhere." The only way communities can justify such
seemingly painless "voluntary taxation" lies in
the proposition that it takes money from the pockets of
people who live elsewhere. Once that argument can no longer
be made and gambling begins to devour its own home communities,
it will begin to be banned. We have long and sorry experience
here as to the social costs extracted by the industry, again
something you may review via the search engines and the
news links below.
If your thrust is education,
I further suggest you look at educational impacts in Mississippi.
In one community, a sorely needed new school was placed
in the most affluent -- mostly white -- part of town.
You might also look
at the California Indian
Gaming Website as another resource. Daily updates are
Thanks for your interest
and please let us know how else we may be of service. We
would like to see the result of your research.
Be well. Raise hell.
The quick answer seems
to be "no."
Not only does the gross
gaming tax not go to schools, but Steve Wynn's art tax loophole/casino
art subsidy places another shunt to gambling from students.
(Sen. Joe Neal's site is loaded with articles on the issue,
as is Casinos
Out of Politics. The new search engines make additional
information easily retrievable.)
The most vaunted (and
expensive) of all studies of Nevada taxation is the Urban
Institute/Price Waterhouse study submitted to the 1989 Nevada
Legislature. At the time, I got a copy which consisted of
five spiral-bound volumes weighing more than 25 pounds--the
all time Silver State champion for cost and dust gathering
surface area. As I recall, it cost about $400,000.
It was later published
in book form by the University of Nevada Press. Curiously,
someone purchased every remaining copy just at the time
Sen. Neal introduced his gaming tax hike in the 1999 legislative
I escaped with the last
one. Here's an excerpt:
"State aid to
school districts in Nevada is based on total guaranteed
support levels, which are tailored to each district and
from which state-mandated, but locally generated, resources
are subtracted. The difference between total guaranteed
support and local resources (a one-and-one-half-cent sales
tax known as the Local School Support Tax and a twenty-five-cent
a valorem tax on real property) is state aid and is funded
by the Distributive School Account. The aid formula allows
for differences across districts in the costs of providing
education and in local property wealth...School districts
receive additional revenue that is not part of the guaranteed
school support program (which is) intended to cover about
85 percent of the districts' general fund needs. The balance
is to be generated through an additional fifty cents of
ad valorem tax on real property, motor vehicle privilege
taxes, franchise taxes, and other local and federal revenues."1
While the relative percentages
of sales v. property taxation noted in the 1989 study, above,
have changed, the mix of taxes remains the same and the
gambling industry is still absent. This is why Steve Wynn's
casino art tax break is so egregious. It takes money from
sales/use taxes, a good portion of which are earmarked for
the Local School Support Tax.
In 1976, California
voters passed property tax-slashing Proposition 13. In 1980,
based largely on vague but glowing promises of something
better from first-term Republican Gov. Robert List, Nevada
voted down a similar petition, Question 6. List's post-election
solution involved raising sales taxes in order to cut property
taxes - the infamous Tax Shift or Tax Shaft of 1981. Large
property owners such as casinos became the principal beneficiaries
of what began as a populist homeowners revolt.
The sales tax hike continued
and worsened an unfortunate long-term trend toward regressive
taxation which penalizes low-income people. Nevada's dependence
on the unstable sales tax began in the late 1940s, according
to longtime Nevada reporter Dennis Myers of Reno's KOLO
TV-8 and the Las Vegas Business Press.
In a column in the July
23, 1999, Daily Sparks Tribune, Myers noted "as the
baby boom gained force, the state's teachers led a drive
for a school funding source. They chose the sales tax...The
rate of collection is so gradual that taxpayers don't realize
how heavily they're being taxed...But it has risen to such
a level that it is no longer easy to hide - checkout clerks
say they now get incessant complaints about the tax,"
In the depths of a severe,
Federal Reserve-caused recession, Gov. List and the 1981
Nevada Legislature moved us to increased dependence on unstable
sales taxes (only 25% of which are paid by tourists). As
a result, we have one of the most regressive tax systems
in the country. List was defeated for re-election in 1982
and now works as a gambling casino executive.
Things had gotten so
bad by 1991 that the legislature passed the "BAT"
(business activity tax, now re-labeled a business license
tax). The names are a shuck to maintain the fiction that
we have no state income tax on business. The BAT is a per-head
tax on employees and gave big employers like casinos a 25%
volume discount. Even a business tax had to be regressive
to pass muster in the Silver State.
The BAT still does not
generate enough revenue (less than 2% of the state's biennial
budget) to make a dent in the state's needs.
The gambling industry
will assert that it's the principal generator of the economy
and pays lots of other taxes, but most of them are pass-throughs
and casinos even earn a fee for collecting some of them.
They do pay property
taxes, so in that sense they can say they pay some indeterminate
contribution to the schools. However, their property values
are not calculated like taxes on the average home. When
their profits slip, they can and do apply to get their taxes
reduced. (See my column of December
7, 1997 among other information you may access thru
the search engines.)
Please keep in mind
that whatever property levies casinos may pay do not constitute
a tax on gambling operations. Their property taxation is
based on market value of their businesses and in that arena
gaming is no different than the corner barbershop or a manufacturer
of kitty litter. Said property taxes remain quite low due
to the 1981 Tax Shaft-- and all state and local taxes are
fully deductible on a federal income tax return.
The only real tax the
industry pays, the gross gaming tax, goes directly to the
state's general fund. The industry gets back a full third
in the form of corporate welfare programs such as:
1. Wynn's art tax
2. The Lucky Bucks
tax loophole, which allows casinos to deduct the full
face value of promotional coupons and complimentary casino
chips given to patrons. This effectively becomes a license
to print money, as the Monopoly money passed out to customers
is fully deductible from gross gaming taxes owed the state.
3. Hotel room taxes,
hundreds of millions of which are annually shunted from
parks and infrastructure to casino advertising and promotion
through convention and visitors authorities statewide.
We will be happy to
respond to any other queries.
Be well. Raise hell.
Ebel, Robert D., Editor; "A Fiscal Agenda for Nevada";
720 pages; University of Nevada Press, 1990; pages 327-28.
From a prologue: "This report was written jointly by
analysts at the Urban Institute and Price Waterhouse under
contract to the Nevada State Legislature."
ISBN 0-87417-153-9; ISBN 0-87417-154-7 [pbk.]