Tag Archives: capital gains tax

Should Federal Dollars Go To States With Low Taxes?

03 Tuesday Apr 2018

Posted by in About Reno, All Rights Reserved, Business, Conservatives, Donald Trump, Economy, Ethics, Government, Honor, jobs, labor, Nevada, Politicians, Politics, Reno, Taxes, Technology, United States, US History

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Nevada has no income tax, no corporate tax, no inventory tax, and no capital gains tax. Should the rest of the country be taxed to give money to Nevada? The idea that some State and local governments can avoid taxing their citizens, but expect to receive federal tax dollars is a question of fairness and equity. Perhaps the federal government should base allocations to States based on their willingness to act fiscally responsible?

Virginia State Line

Some States Pull Their Weight

Low Taxes Myth

There is a myth that low State taxes attracts businesses, that in turn, attracts jobs for the citizens. In Nevada, the tax haven does attract companies, but only those that seek to dodge taxes. The Sierra Nevada Corporation is a prime example. They are a private defense contractor that, among other things, seek to become the next privatized NASA.

The Sierra Nevada Corporation sounds like it would be a major employer in Nevada. It is not. Currently, it claims to have over 3,500 employees in 33 locations around the world.  In 2014, about one-third of its employees were in Colorado and the potential job growth is at its Colorado facilities.

However, its corporate headquarters is in Nevada. The company was founded in Nevada; however, the State does not have the caliber of workers needed for the high technology jobs. So why not move the company to Colorado? Because the corporate staff and the company enjoy the tax immunity of Nevada.

Freeloader States

According to WalletHub.com, the ten State governments that are most dependent on federal money are as follows:

  1. Louisiana
  2. Mississippi
  3. Arizona
  4. Kentucky
  5. New Mexico
  6. Montana
  7. Oregon
  8. Tennessee
  9. Missouri
  10. Alaska

These States are the top ten with the lowest taxes on their residents, (with the ranking of federal dollar dependency,) according to USA Today (Taxes on corporations are not included):

  1. Alaska (10)
  2. Wyoming (20)
  3. South Dakota (14)
  4. Tennessee (8)
  5. Louisiana (1)
  6. Texas (21)
  7. New Hampshire (31)
  8. Nevada (36)
  9. South Carolina (29)
  10. Oklahoma (26)

Three of the top five having the lowest State taxes are also among the top ten State governments most dependent on federal money. The residents of another three of the top ten States with low taxes are in the top fifty percent in dependency on federal subsistence.

Five of the top ten States (Alaska, Wyoming, South Dakota, Texas, and Nevada) with the lowest taxes have no State income tax.

Pulling Their Weight

Many States use federal money to supplement their own tax revenue. It is only fair that they should. It is unfair that some States tilt the tax revenue field and expect federal money to replace State revenue. Perhaps it’s time that federal money should be restricted from States that do not have an adequate local and State tax structure to provide a foundation for services for their citizens before federal money is given to them.

Tax Breaks Don’t Work When Everyone is Giving Them

02 Monday Apr 2018

Posted by in About Reno, Business, Conservatives, Donald Trump, Economy, Ethics, Government, Government Regulation, jobs, labor, Lessons of Life, Management Practices, Nevada, Panama, Politicians, Politics, Real Estate, Reno, selling, Taxes, Travel, United States, US History

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The United States of America has a tax problem. We have too many local and state governments using ‘fire-sale’ tactics to attract business through tax breaks. It is a problem caused by conservatives. They have created the myth that taxes hurt business so lower taxes will increase business. The irony is that the strategy that conservatives inflict on government is a strategy that they would laugh at in the business world.

Panama’s strategy of low or no taxes brings in the wrong business

What’s Bad For Business is Bad For Government

When a business puts their products on sale, they do so with the expectation that it will increase business and volume will make up for the lower price. If the sale price is too low the business loses money. In addition, the customer might think there is something wrong with the product when the price is too low. If a company’s competitors match or beat the sale price, everyone loses except the customer. It is not good business.

The same is true for governments. Tax breaks reduce revenue for the maintenance and improvement of local communities. When tax breaks are overused, the community suffers from the lost revenue. The myth is that less tax revenue is more money for everyone only works if the tax break has no significant impact on the quality of the government. In addition, if competing governments are giving the same or better tax breaks the strategy fails for everyone.

In Nevada, the State has no income tax, no inventory tax, no corporate tax, and no capital gains tax. When the state or local government gives a tax break to a business, it is automatically a net loss for the community. Any business moving to Nevada is already coming for the low tax rate and any other break is just giving away money.

Panama’s What Not To Do

Panama has about the same population of Oklahoma. That is not a lot of people for tax revenue purposes. In 1994, Panama passed a law that basically gave a tax break to a property owner for 20 years. It was more complicated than that, but it attracted a lot of foreign investors. What happened?

It attracted people of modest wealth that were looking for only for the tax break. The jobs created were minimal, but it dramatically increased the value of land and property. Citizens of Panama suddenly found that home prices skyrocketed and because many were living as tenants, they had to move when the landlord sold the property for more money.

The end result was no one benefited from the tax strategy but wealthy developers.

Tax Breaks Always Fail

The reality is that tax breaks always fail. Despite thousands of tax breaks being given by local and state governments every year, there is no evidence that they actually have a positive impact on the citizens of the community. Tax breaks for companies don’t create more jobs, increase worker pay, or improve a dying economy. They make rich people richer.