Ballot Update 2008: Nevada: A Toothless Proposal with Great Ideals

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The attention paid to Nevada's ballot situation declined dramatically when a Proposition 13-style cap was kicked off the ballot due to election law violations. But voters will face another interesting tax-related proposal in November. Question 3, placed on the ballot by the Nevada legislature, seeks to amend the state's constitution to require that any proposed exemption to property taxes, sales taxes, and use taxes be demonstrated to have some social or economic purpose. Additionally, the proposal seeks to require that all new exemptions also be enacted with an expiration date, or "sunset provision".

The first of these requirements (that a social/economic purpose be demonstrated) will likely change very little in practice. The proposal is sufficiently vague on what constitutes a social/economic interest that the legislature should have no trouble demonstrating such an interest for any exemption it desires to enact.

The second requirement (that all exemptions be written with sunset provisions) may be a bit better in terms of practical effect. Of course, since no limit is placed on when any specific exemption must sunset, the legislature can easily bypass this requirement for all practical purposes by writing the legislation to sunset at some date absurdly far into the future. But the goal is good in concept. By requiring that all exemptions be periodically reexamined (or face expiration), parties receiving benefits through tax exemptions will be treated in a manner more analogous to those who receive government benefits through direct spending. Unlike budgetary outlays, which are usually revisited every year of two, tax exemptions are often tucked into the tax law and forgotten about, only to continue benefiting the parties in perpetuity.

So while Question 3 won't do too much to shake up Nevada tax policy, hopefully it will spark some useful discussion in the state about enacting more meaningful reforms.

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