Craig's Corner - Wealth Planning Insights

Wednesday, October 15, 2014

Trouble in Nevada's Tax Paradise?

Nevada has long been popular among companies seeking to incorporate in a business friendly environment. Nevada's approach to corporate governance laws and the state's lack of a personal income tax and corporate income tax make it an ideal choice. 

Still, the state has a number of taxes and fees, ranging from a higher-than-average sales tax to a 1.17% tax on gross wages for some businesses and 2% for financial institutions.  Taxes on hotels as well as "severance taxes" on oil and mineral extraction, such as the "Net Proceeds of Mines Tax," are also a consideration when doing business in Nevada.   

Overall, the Tax Foundation in Washington, D.C still ranks Nevada's business climate as third best in the country.   But that could change after the coming election in November when voters will cast ballots on potentially significant tax proposals.

If passed, the Nevada Mining Tax Cap Amendment, also known as SJR 15, would let the Nevada Legislature raise the current 5% tax on the net proceeds of gold and other minerals extracted in the state.  Another proposed tax is an increase in the Modified Business Tax on financial institutions. 

Then there is the Nevada Margin Tax for Public Schools Initiative.  If voters approve it, it would place a 2% margin tax on a large number of businesses operating in Nevada.  Businesses would have to choose one of two formulas for calculating the 2% tax.  Revenues from the tax would be given to Kindergarten through12 public schools, though other school funding might be reduced resulting in no overall increase in education spending.   Critics complain that the funds are not specifically earmarked for education and that the tax will raise costs for small and medium-sized companies.

State legislators have a number of other taxes in mind for 2015.  At the same time, some taxes may expire because of "sunset" laws or their rates may revert to lower levels.

While Nevada remains a corporate tax haven, business owners need to plan ahead and evaluate how state taxes and fees affect their plans and their bottom line.  Experienced Nevada business law and tax attorney Craig Stone has the expertise to advise you on your best options.  Call (877) 905-0890 for a consultation today.

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S. Craig Stone II of Stone Law Offices, Ltd. serves clients throughout Clark County, Southern NV, Las Vegas, Henderson, Boulder City, North Las Vegas, Summerlin, Carson City, Reno, Washoe County, and Nye County. Also serving clients with asset protection nationwide.

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