Why Gaming shouldn't be taxed
Inside Liberty Watch Today - Jan. 5, 2006
With democracy (and constitutional republic) fans still carping about the already announced, filed, or re-filed initiatives, another ballot initiative is on its way. This one would increase the gaming tax on Nevada's largest casinos from the 6.75 percent charged now to 18.25 percent.
Conservative pundits have already pooh-poohed the initiative that would go to the Legislature for its consideration in 2007 if the necessary 83,184 signatures are gathered by Nov. 14. If then, those 63 deep-thinkers demur, the gaming tax increase would go to the voters in 2008.
The Review-Journal editorial page called the proposal "not well thought out," contending that a tripling of the gaming taxes on Big Gaming would--in an interesting choice of words: "cripple the state gaming industry."
Someone else wrote that the tax would kill the goose that lays the golden eggs.
Anyone who has read this space for any length of time doesn't need the economics lesson on the results of taxation. But, in case you forgot, taxes are pushed either forward or backward. In this case, consumers will pay with fewer amenities, lower payouts, and reduced service, or employees will pay the tax with lower pay and fewer benefits, or the shareholders will pay with lower returns; or a combination of all three.
Of course all of these are bad for the long-term vitality of the state's economy. If gaming customers receive a product they
perceive as inferior, they will spend their entertainment dollars elsewhere. Lower paid employees will likely look to greener gaming pastures to ply their trade, or stay here and be poorer. And, finally, as gaming company returns are siphoned away to state government's black hole rather than returned to shareholders, that capital over time will be invested elsewhere.
Nevada has the most abundant gaming competition in the world vying for your gambling dollar, thus the payouts are high, the games fair and the perks plentiful. That's a direct result of the lower gaming taxes paid in Nevada.
Gaming companies make investments in other jurisdictions with much higher gaming taxes, because they are promised limited competition. Gamers can make a 14 or 15 percent tax work if they have little or no competition. But a trip to Harrah's Prairie Band casino north of Topeka, Kansas will not remind you of the corner of Las Vegas Boulevard and Flamingo.
Conservatives and liberals alike look at casino operators as ATM machines for the state; that somehow appeared out of nowhere. They forget that it takes many millions, and in some cases billions, of dollars to open a competitive hotel casino. They believe that casinos run themselves; that no expertise is required. Nothing could be further from the truth.
Nevada's casino operators are competing for customers all over the world. They must be well capitalized, have business savvy and be marketing geniuses. Otherwise, Las Vegas, Nevada would look like Las Vegas, New Mexico.
Make no mistake, if the masses ever get the chance to vote to increase gaming taxes, or the taxes on any business for that matter, they will do it overwhelmingly. The same mathematics-challenged people who willingly sit and feed their present or future retirement money into gaming machines trying to get something for nothing are the same people who think casinos are somehow stealing from them and that these big, bad casino owners should be punished with higher taxes.
There is no fatter ox to be gored than the gaming ox. Virtually every other business in this state is a cottage industry in comparison. But, all Nevada businesses will suffer if gaming is taxed into oblivion.
Gamers should heed this wake-up call. The way to protect their businesses from greedy politicians and their even greedier constituents is to support reigning in government spending, whether by TASC, or by supporting a candidate for governor who will stop state government's profligate growth.
The gaming tax initiative is not just an attack on the gaming business, but on all Nevadans.
Doug French, Liberty Watch Nevada
