Last week MGM chief Terry Lanni delivered remarks to the Nevada Development Authority concerning the “chaos” of the state’s economy. It’s quite understandable why Mr. Lanni took time to address this important public policy issue; after all, there are at least two ballot initiatives being planned to sock the gaming industry with a huge new tax hike. The teachers union is filing theirs today. But in many ways, gaming has only itself to blame.
The industry has been appeasing the Big Government crowd for decades now by supporting one tax hike after another, as Mr. Lanni himself acknowledged in his remarks. Indeed, Mr. Lanni proudly rattled off one tax hike after another which gaming has supported over the past 20 years: A 1986 hike in estate taxes; a 1987 gaming tax hike; a 1991 sales tax hike and a new employee head tax; a 1993 sales tax hike; a 1993 room tax hike; a 1996 property tax hike; a 1997 sales tax hike; a 1997 room tax hike; a 2002 tax hike on developers, aviation fuel and retail sales; a 2004 sales tax hike. And in 2003 – four short years ago and the year of the mother or all tax hikes in Nevada - Mr. Lanni noted that “gaming supported several potential taxes,” including a gross receipts tax.
As Winston Churchill famously noted, “An appeaser is a guy who throws his friends to the alligator in hopes that the alligator will eat him last.”
Well, the Big Government alligator just belched and is now eying gaming for dessert.
Gaming has, unfortunately, been supporting the non-stop growth of both the size and scope of government for the last two decades by constantly supporting efforts to fund bigger and more energetic government. This gaming tax initiative monster, one might argue, is a creation of the industry’s own making. So it’s not easy for fiscal conservatives to feel sympathy for the predicament gaming finds itself in these days.
It also doesn’t help when the tax issue is misrepresented. For example, Mr. Lanni asserted that “the largest components of the 2003 tax package were paid solely or primarily by the gaming industry: the live entertainment tax, the alcohol tax and cigarette tax.” Not.
One of the biggest myths in the tax debate is that businesses pay taxes. They don’t. Businesses collect taxes and/or pass taxes along to customers in the form of higher prices. Indeed, I went to a show in Las Vegas recently and paid the entertainment tax out of my own pocket. Gaming didn’t pay that tax; I did. Ditto the tax on the cocktail I purchased at the bar.
WE THE PEOPLE
And it doesn’t help for gaming to be slamming the citizen initiative process.
“Let me be clear,” Mr. Lanni told the NDA. “I dislike the initiative process and I’m not alone in this. The founding fathers of this great nation conceived a system of representative democracy. . . . The founding fathers could have chosen direct democracy where every decision is made by initiative. But they didn’t.”
While it’s true the founders wisely established a republic rather than a democracy, it’s also true they believed, as stated in the Declaration of Independence, that whenever government fails to serve the citizens satisfactorily, “it is the right of the people to alter or abolish it.” And the people of Nevada did just that by adding the initiative process to the mix of state government here. The founders surely would have approved.
As has gaming in the past.
After all, gaming has been a big initiative player for years when it was in their interest to do so. For example, rather than oppose a statewide smoking ban initiative two years ago as a matter of principle, gaming threw its support behind a competing initiative which exempted gaming from any such a ban. So you’ll pardon neighborhood bar and restaurant owners for not shedding a crocodile tear over gaming’s current predicament with regard to those looming gaming tax initiatives.
IT’S THE SPENDING, STUPID
By no means am I saying I support a tax hike on gaming. Far from it. I regard gaming as the goose that lays Nevada’s golden eggs. Leave it alone.
But by the same token, gaming has to stop appeasing the Big Government alligator. Rather than dumping on the initiative process and supporting tax hikes on property owners, tourists and consumers, let’s see gaming devote its considerable talent and influence to fostering a discussion on exactly what Nevada’s basic, essential and legitimate government needs are - and then get rid of the rest.
A perfect example was the recent proposal to spend $400,000 of taxpayer money on the creation of a toll-free hotline for people who are having trouble making their mortgage payments. What a stupendously absurd idea, and yet it was almost approved. How many more ridiculous items such as this are already in Nevada’s budget? I’m betting a ton. And they should all be weeded out before any talk of raising any taxes on anybody.
And granted, when considering a $7 billion budget, $400,000 sounds like nickels and dimes. But a nickel here and dime there, as they say, and pretty soon you’re talking about real money. So let’s see full transparency in the budget. The government should post every expenditure it makes on a public website for the people to see and evaluate. Why is the government so afraid of publishing its check register and giving the taxpayers a detailed profit and loss statement?
And if it’s real money you want to talk about, then let’s stop sweeping under the carpet the looming crisis that is our government employee retirement system. If you think our funding situation is dire and in chaos today, you ain’t seen nothing yet. Wait’ll this baby explodes.
BACK TO SCHOOL
And lastly, let me address one other aspect of Mr. Lanni’s remarks: Education.
“Any of us in business,” the MGM chief said, “knows that the quality of graduates of Nevada’s schools has not improved markedly in recent years.” Talk about a gift for understatement.
The fact is, our monopolized government-run schools crank out mediocrity at best. Pumping more money into this dog-with-fleas isn’t going to fix the problem. So instead of continually propping up this Soviet-style system, perhaps gaming should consider leading a cutting edge fight for universal school choice in Nevada. Give parents the authority and the resources necessary for THEM to decide which school is best for their child – whether public, charter, private, parochial or home-school – rather than the government making that decision for them.
But let’s say support for school vouchers or tax credits for private schools is a bridge too far for the industry at this point. Fine. But did you know that the Nevada Board of Education, surely at the instigation of the teachers union, is actually considering a moratorium on the creation of any new public charter schools in the state?
Agenda Item #14 for the November 30 board meeting: “Consideration and possible action to place a moratorium on approving all future state sponsored charter school applications and all future amendments to current state sponsored charter schools.”
The item was placed on the agenda by board member Cindy Reid, a former teacher and current teachers union shill who, despite her glaring hostility toward charter schools nevertheless somehow became the chairman of the Subcommittee on Charter Schools. Talk about the fox guarding the henhouse.
If gaming truly wants to see education in Nevada improve, then it needs to step up and step into the school choice fight - big time. Instead of appeasing the teachers union, it needs to go to war with it. If so, our kids will benefit, our economy will benefit, the gaming industry will benefit and taxpayers will benefit. The only loser will be the teachers union. Isn’t that a fight worth fighting?
I have nothing but the greatest respect for Terry Lanni and the success he’s made out of MGM. And I’m thankful for the jobs and other economic benefits provided by the gaming industry in Nevada. But I simply cannot and will not support calls for Gov. Jim Gibbons to break the promise he made to the voters of this state not to raise taxes. As Mr. Lanni himself noted, we’ve been raising taxes non-stop for the last 20 years. It’s time to try something else.
Posted on November 19th, 2007 by Chuck Muth
Filed under: Nevada
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