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Longtime RN&R news editor Dennis Myers wasn’t a flashy writer—but he knew things.
“Dennis should have worn a battered fedora with a press pass peeking from the hatband,” Frank X. Mullen wrote in the RN&R when Dennis was inducted into the Nevada Newspaper Hall of Fame in 2020. “The motto ‘if your mother says she loves you, check it out!’ would not have been out of place on his business cards.” (Frank would join Dennis in the Nevada Newspaper Hall of Fame a year later.)
The RN&R‘s cover story 13 years ago this week is a perfect illustration of the late Dennis Myers’ encyclopedic knowledge of Nevada and its political history. It involved Nevada’s tax system, its myriad problems, and how it got so messed up. The first portion of the piece:
It was sweltering. Januaries in Carson City are cold, of course, but the Nevada Assembly hall was jammed with bodies and television lights. Even on a weekday evening people traveled to the capitol for these occasions.
Gov. Robert List entered the hall to applause, as most governors do. He held in his hand the text of his 1981 message to the legislature. It contained a proposal that would have impact on the state for the next 32 years, and continues its work today.
“I call for a dramatic slash in property taxes and a massive program of tax reform,” he said. “I propose that we adopt a tax reform plan which will save property owners $150 million on property taxes the first year alone. Let us shift the tax burden to all the people who utilize state services through the sales tax. And finally I propose that we revise the gasoline tax system to enable the state to better meet the needs of the growing number of citizens.”
List called for a 65 to 75 percent cut in property taxes and a 64 percent increase in sales taxes, from 3.5 percent to 5.75 percent. His language was designed to sell with its talk of “reform.” One person’s reform is another’s regression. When List said the tax burden should be shifted onto “all the people who utilize state services through the sales tax,” he neglected to mention that the sale tax does not apply to services—and he wasn’t proposing to extend it that way.
The proposal was not a surprise, though List’s embrace of it was. He had promised not to raise the sale tax and had run for governor saying that the 3.5 percent sales tax should be lowered to 3 percent.
Two legislators—Republican Robert Rusk and Democrat Steve Coulter—were already promoting a similar plan before List’s message, but until the governor got behind it, its chances were uncertain at best.
After Democrats and the press took a fall, List won enactment of his tax package—and then literally within days, the state paid the price. Ever since, Nevada has been more vulnerable to economic downturns, less competitive with other states, hard pressed to stay ahead of the curve—and workers in the state have been soaked.
Soon, the latest Nevada Legislature not to deal with the problem created in 1981 will adjourn and go home for two years, kicking that can down the road one more time.
Every Nevada Legislature since then has continued to kick that can down that road—and the state is hurting, in many ways, as a result.
To oversimplify things: In progressive tax systems, richer people pay a higher percentage of their income in taxes; with regressive tax systems, lower-income people pay a higher percentage of their income in taxes. According to the Institute on Taxation and Economic Policy (ITEP), Nevada has the fifth-most regressive tax system in the nation.
“Ten states—Florida, Washington, Tennessee, Pennsylvania, Nevada, South Dakota, Texas, Illinois, Arkansas, and Louisiana—are particularly regressive, with upside-down tax systems that ask the most of those with the least. These states tax their poorest residents—those in the bottom 20 percent of the income scale — at rates averaging three times higher than those charged to the wealthy,” says the most recent ITEP “Who Pays?” report.
Nevada, which famously does not have an income tax, heavily relies on sales tax revenue and gaming tax revenue—both of which tend to get hard by recessions.
Meanwhile, because of the aforementioned restrictions the state has on property taxes, local governments have their hands tied regarding that important revenue source. The result, as our clever cover 13 years ago declared, is a crappy tax system.
Last June, The Nevada Independent looked at the latest failed effort to alter the state’s property-tax system.
AJR1, sponsored by Assm. Natha Anderson (D-Sparks), would have (tweaked) the state’s property tax structure. It’s one of only two funding mechanisms—sales tax is the other—that a Legislature-commissioned panel of finance experts said is broad enough to get education funding close to the national average.
Instead of raising property taxes outright, AJR1 would have made a property ineligible for tax abatements the first year after it is sold, and revise the state’s tax code so that a property’s taxable value would reset when sold.
The measure could have generated millions in additional funding for schools. An analysis of a near-identical 2017 measure found that it could have generated as much as a half-billion dollars annually for operating funds in about a decade. A 2024 report by the state’s school funding commission had similar findings.
In order for AJR1 to become law, it would have needed legislative approval in both 2025 and 2027, and then voter approval in 2028. But after passing in the Assembly last year, it died in the Senate.
Nevada’s property-tax system is unquestionably uneven and unfair. Back to that Nevada Independent piece:
The bill faced strong opposition from the real estate industry, which argued AJR1 could have raised constitutional issues, going against an “equal and uniform” taxation provision codified in state law.
This is in part because of the state’s depreciation formula, which reduces the taxable value of real estate at a rate of 1.5 percent annually over a 50-year period. This means that a home with a lower market value can have a significantly higher taxable value than a more upscale property, simply because of its age.
Dylan Shaver, a representative for the progressive group New Day Nevada that supported AJR1, offered two Northern Nevada properties as an example. One of them, a historic mansion, was listed for $2.4 million but was valued at $75,000 for property tax purposes. That’s in comparison to a newly built home listed for $550,000 with an assessed value of about $84,500.
This means that homebuyers of less-expensive properties can end up paying significantly more in taxes.
“That depreciation ends up creating pretty significant holes and gaps at the local level that can not be resolved,” Shaver testified.
Nevada is the only state to apply a depreciation formula to real estate, bill proponents point out. By resetting depreciation at the point of sale, advocates such as Shaver argue that the state’s tax system would not only become more fair, but could bring in more revenue.
The state’s education system is struggling and, even after a big boost from the Legislature in 2023, underfunded. The state’s health system is one of the nation’s worst-performing.
Nevada’s tax system needs an overhaul—it’s not going to happen anytime soon. Regarding AJR1, The Nevada Independent said: “Even proponents said that tweaking the state’s property tax structure is a politically unsavvy move—it could rankle homeowners, who are more likely to vote than their counterparts who rent—and could very well threaten lawmakers’ shot at re-election if the measure passed.”
Most Republicans promise there will be no new taxes. Most Democrats want to preserve their power. To paraphrase what Dennis Myers wrote 13 years ago: Barring something very unforeseen in 2027, the Nevada Legislature will not solve the problem created in 1981, and will instead kick that can down the road yet again.
—Jimmy Boegle
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