Judge takes Nev. tax initiative under advisement

CARSON CITY, Nev. (AP) ? Attorneys for a business coalition argued Tuesday that a Nevada initiative seeking to impose a margins tax on businesses to fund education is misleading because it does not ensure more money for public schools, while backers countered the wording meets legal standards and should be allowed to proceed.

After listening to arguments from both sides at an hour-long hearing in Carson City, District Judge James Wilson Jr. took the matter under advisement and said he would issue a ruling later.

The education initiative pushed by the Nevada State Education Association and Nevada AFL-CIO would impose a 2 percent margins tax on businesses that gross more than $1 million annually. It is modeled after a similar tax structure in Texas, and supporters say it would generate about $800 million annually for public schools.

Committee to Protect Nevada Jobs, a coalition of business and other organizations, argues the more than 20,000-word initiative is deceptive and violates the single-subject rule for ballot questions. The coalition also argues the measure's description of effect ? a required synopsis limited by law to 200 words ? fails to adequately explain the initiative's ramifications.

Coalition attorney Josh Hicks also said a separate temporary tax increase on financial institutions contained in the measure to provide startup administrative costs to collect the margins levy amounted to an illegal unfunded mandate.

Hicks said there was no mandate that money raised by the tax go to education, and claimed the measure would "allow government to spend additional funds in any area ? possibly education, possibly not."

But Jim Penrose, arguing for supporters, said the committee's assertion that money raised by the tax could be "frittered away" was wrong.

Penrose said the initiative makes it clear margins tax revenues would be deposited in the state's distributive school account, a fund governed by another state law that dictates it be reserved for schools.

Penrose, however, conceded that if the initiative is passed, state lawmakers could redirect those funds three years after the law takes effect.

Wilson questioned lawyers on an initiative provision requiring public disclosure of taxes paid by businesses on the Internet and claims by opponents that even businesses losing money could be subject to the tax because deductions would be limited.

Lynn Warne, Nevada State Education Association president, and Danny Thompson, secretary-treasurer of the Nevada AFL-CIO, earlier said that signature gathering was delayed in anticipation of legal challenges. Regardless of how Wilson rules, an appeal to the Nevada Supreme Court is likely.

After Tuesday's hearing, Warne said their polls show voters by a 2-to-1 margin support a stable funding source for education. She also said backers would reconsider whether to begin collecting signatures before the legal challenges are exhausted.

If allowed by the courts to proceed, initiative sponsors will need to collect more than 72,000 signatures by Nov. 13 to send the issue to the 2013 Legislature. If lawmakers fail to act or reject it ? a likely scenario ? the issue would go to voters in 2014.

Source: http://news.yahoo.com/judge-takes-nev-tax-initiative-under-advisement-140244934--finance.html

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