The Education Initiative

Nevada Ballot Measure - Ballot Question No. 3

Election: Nov. 4, 2014 (General)
Outcome: Pending

Categories:

Summary

This ballot measure proposes to impose a two-percent (2%) margin tax on business entities in Nevada with total revenue in excess of $1,000,000, and it requires that the proceeds of the tax be used to fund the operation of the public schools in this State for kindergarten through grade 12. If this ballot measure is approved by the voters in the 2014 General Election, the applicable margins tax would take effect January 1, 2015.

The ballot measure includes an exemption from the tax for natural persons not engaged in business, passive entities, governmental entities, tax exempt organizations and credit unions authorized to do business in Nevada. Also, any business entities with total revenue of $1 million or less are not subject to margin tax. The tax would apply to all other businesses and organizations with total revenue in excess of $1 million in any taxable year.

The ballot measure would impose the 2% tax rate on the entity’s taxable margin. Under the ballot measure, a business entity’s taxable margin is determined by taking the lesser of:
(i) 70% of the entity’s total revenue; or
(ii) the entity’s total revenue minus either: (a) the cost of goods sold; or (b) the amount of compensation paid to its owners and employees.

The 2% tax would be imposed on the percentage of this margin that corresponds to the percentage of the entity’s total business that is done in Nevada. A business entity that pays the existing tax on payroll, commonly referred to as the modified business tax, would be credited for that amount against the amount it would owe under this measure.

If approved by the voters, proceeds from the tax would be deposited in the State’s Distributive School Account (DSA) in the State General Fund and will be apportioned among the county school districts and charter schools in the manner provided by state law to fund K-12 public education. The DSA provides the primary source of public education funding for Nevada’s 17 county school districts and its various charter schools. The DSA is funded by legislative appropriations from the State General Fund and other revenues. The ballot measure does not change how funds in the DSA can be spent or allocated.

A “Yes” vote would impose a 2% margins tax on Nevada businesses with revenue in excess of $1 million with the tax proceeds being deposited in the State Distributive School Account in the State General Fund and used to fund K-12 public education.

A “No” vote would retain the existing tax liability for businesses in Nevada and retain the existingsources of K-12 education funding.

Measure Text

Shall the Nevada Revised Statutes be amended to create a 2% tax to be imposed on a margin of the gross revenue of entities doing business in Nevada whose total revenue for any taxable year exceeds $1 million, with the proceeds of the tax going to the State Distributive School Account to be apportioned among Nevada’s school districts and charter schools?

Yes [ ] No [ ]