- Associated Press - Thursday, October 9, 2014

LAS VEGAS (AP) - Advocates on both sides of a proposed 2 percent tax on business revenues made their cases Thursday, with a proponent arguing that the so-called Education Initiative is desperately needed to ease crowding in Nevada schools and an opponent arguing that it’s a deeply flawed job-killer.

The debate on the margins tax, also known as Question 3, will air on Vegas PBS Friday evening.

“This has been very personal for me,” said proponent Dan Hart of the Nevada State Education Association, a teachers union. “I have two children in the public schools, and through them, I have seen the overcrowded classrooms. I’ve seen the teachers try to work miracles without adequate resources The only way we can fix this is by passing Question 3.”

Proceeds from the tax, which would apply to businesses with annual revenues of more than $1 million, would go to Nevada’s Distributive School Account, the main source for the state’s schools funding.

But opponents said there’s nothing to stop legislators from lowering their regular contributions to that account as a result.

“There is no guarantee that the money will not be swept away and used for other things,” said Karen Griffin of the Coalition to Defeat the Margin Tax Initiative. “We have a long history here in Nevada of diverting funds that were supposed to be for education.”

The margins tax would apply to business revenues even if they’re not making a profit, which could hurt small businesses operating on thin margins, Griffin argued.

“Most grocery stores operate on 1 or 2 percent profit margins,” she said. “Their profits would be wiped out. They may have to raise prices or shut their doors.”

Griffin added that because the tax is based on gross revenues, it’s comparable to a 14 to 15 percent corporate income tax, which would be nearly double the rate in California.

Hart dismissed the argument, saying that gambling and the state’s modified business tax apply to businesses regardless of profitability. Nevada also doesn’t have a personal income tax, he noted.

“It’s just a canard,” Hart said. “We’re still going to be a low-tax state.”

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