Despite having no income tax, spending interests are pushing a new business tax despite opposition from taxpayers and even the AFL-CIO.

Question 3: “The Education Initiative” – Despite the innocuous sounding name, Nevada’s Question 3 would implement a new 2% “margin tax” on businesses operating in the state of Nevada. The revenue from the new tax would be granted to the state’s public schools. The Question was placed on the ballot via indirect initiative, meaning that a public petition was circulated and then sent to the legislature for approval to be placed on the ballot. The ballot question will read: “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?”

If passed, the margins tax would result in a massive $750 million annual tax hike – a hike of 450% on Nevada businesses.

Originally, the initiative push for Question 3 was primarily backed by the Nevada AFL-CIO and the Nevada State Education Association. Despite initially backing the initiative, a revolt among AFL-CIO members forced the union to drop their support for Question 3. Danny Thompson, executive secretary treasurer for the Nevada AFL-CIO, issued a statement following the vote: “The vote today in opposition to the margins tax initiative is not a vote against education. It is a vote against a flawed initiative that will cost many of our members their jobs and raise the cost of living on Nevadans on a fixed income and on citizens that are still struggling to make ends meet after years of a terrible recession.”

The margin tax has received opposition from Nevada Gov. Brian Sandoval (R), several Democrat state legislators, a bevy of local business groups and chambers of commerce, as well as Jim Murren, CEO of MGM. The Coalition to Defeat the Margin Tax Initiative notes: “Overall, it would dump a massive $750 million increase on the costs of doing business for Nevada employers. That would severely damage our state’s already struggling economy and job market… Proponents claim that the $1 million gross revenues threshold protects small businesses. But in reality, the Margin Tax Initiative would hurt thousands of small businesses in Nevada that have total annual gross revenues of over $1 million but also have high overhead and very small profit margins – such as family-owned restaurants, medical clinics, daycare centers, repair shops, veterinarians, janitorial services, ranches, and farms.”