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Nevada 49th lowest in tax burden, but 28th in tax collections, new study says


By Sean Whaley, Nevada News Bureau: Nevada residents bear the second lowest state and local tax burden of any state at 7.5 percent, behind only Alaska at 6.3 percent, according to a new report from the Washington, D.C.-based Tax Foundation.

But an analyst for a conservative Nevada think tank says the state’s tax collections are near the national median, and any suggestions by some policymakers that residents should pay more to fund government programs are not borne out by the study.

Nevada has consistently ranked in the top five least taxed states since the foundation first began reporting the data nearly two decades ago.

Residents of New Jersey, New York and Connecticut paid the highest state and local rates in the nation in fiscal year 2009, giving up 12 percent or more of their incomes to the tax collector, the study found.

The report also analyzes the taxes paid by residents of one state but collected in another, such as California residents who visit Nevada to gamble.

Not surprisingly, it shows Nevada collects much of its tax revenue from out-of-state visitors.

As the study points out: “Major tourist destinations like Nevada and Florida are able to lower their residents’ burden to the state by taxing tourists, who are likely to be non-residents. Nationwide, over a quarter of all state and local taxes are collected from non-residents.”

In Nevada, the state ranked 28th in terms of total state and local tax collections per resident, the report found.

But only $1,988 in taxes were paid by each Nevada resident. Another $1,799 in taxes per each Nevada resident were collected from non-residents. These two categories taken together put Nevada at the 28th place ranking in total state and local tax collections.

Geoffrey Lawrence, deputy director of policy at the Nevada Policy Research Institute, said the study clearly shows a low tax burden for Nevada residents, but a level of tax revenue that is near the median of the 50 states. The report for 2009 also does not include the major tax increases approved by the 2009 Legislature for the current two-year budget.

The 2009 tax increase will expire on July 1, 2011, unless extended by the Legislature. Gov. Brian Sandoval is opposed to any such extension and has voted to veto any tax increase approved by lawmakers.

“Regardless of who bears the burden of taxes, lawmakers still have the money to spend,” Lawrence said. “Not including the largest tax hike in Nevada’s history, the Tax Foundation report still shows that Nevada has more money to spend per capita than 22 other states. As this report proves, in terms of tax collections, Nevada is not a ‘low-tax’ state.”

Even so, some Nevada lawmakers are citing the study as proof that Nevadans are under-taxed, he said.

“So when you talk about government being somehow underfunded in Nevada, I just don’t see how that really is the case,” Lawrence said. “I would agree that a lot of funds are spent inefficiently here in Nevada.”

Sandoval has submitted a $5.8 billion general fund budget that he says contains no new taxes or fees, but some of his funding alternatives, such as shifting the cost of programs to local governments, have been criticized by lawmakers, county governments and school officials.

Lawmakers who convened Feb. 7 for the 2011 session have also heard testimony on the many program cuts in Sandoval’s budget, and the consequences of those spending reductions on everything from mental health needs to higher education.

Sandoval has said he does not want to increase the tax burden on residents or struggling businesses. Job creation is the way for Nevada to grow out of its current financial difficulties, he has said.

Audio clips:

NPRI analyst Geoffrey Lawrence says Nevada’s level of government funding is on par with other states:

022511Lawrence1 :09 you see elsewhere.”

Lawrence says Nevada government is not underfunded:

022511Lawrence2 :19 be better organized.”

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