Jeff Simpson says it’s time for Nevada to look at a new triple-tiered tax for casinos

Nevada’s 6.75 percent top-tier tax on the money casinos win from gamblers is ripe for review.

I’m not one of those folks who simple-mindedly look at the state’s gaming tax rate and compare it to the more confiscatory rates in other states. It’s no coincidence that Nevada gets far more casino-related investment than other states – the lowest-in-the-nation tax rate is a primary lure that allows developers to build the multibillion-dollar resorts that attract tourists by the tens of millions.

Tax rates are one of the most effective methods government has at its disposal to motivate change that would benefit society. Offering tax incentives – or penalties – to accomplish social goals is an effective way to realize change.

The rate changes I propose would be revenue-neutral, or close to it. The social goals the changes would help accomplish include: Retaining the ability of the state’s dominant industry to build dramatic resorts and earn healthy profits; reinvigorating some historic downtowns ; and boosting spending on problem-gambling programs.

I think it would make sense for Nevada lawmakers to change the tax rate paid by the state’s biggest casinos from the current 6.75 percent rate. The top tier would be split into three groups, each with their own tax rates: tourist corridors, city and town centers, and suburban locations.

The tourist corridors would include the state’s biggest market, the Las Vegas Strip, which now regularly produces more than half of the state’s gaming win (the money won from gamblers) and gaming taxes. Also included would be the border cities of Laughlin, Primm, Jean, Mesquite, at north and south Lake Tahoe, Jackpot and Wendover. Casinos in these markets would pay a 7 percent gaming tax, a slight quarter-point more than they now pay, and that rate would be the new base tax rate for the state’s biggest casinos.

The increase would help fund a tax-rate cut for city and town centers to 5 percent. Casinos in downtowns and small towns would benefit from the tax cut, which would likely spur investment in the historic homes to Nevada’s earliest casinos. Places that would enjoy the lower rate would include: downtown Las Vegas and Reno, as well as the historic city centers in Carson City, Henderson and North Las Vegas. Small town casinos all around the interior of Nevada would also receive the new rate.

Suburban casinos in Clark and Washoe counties would pay the highest rate of 9 percent. Existing casinos would be grandfathered and would pay the state’s base 7 percent rate. But new locals casinos near Las Vegas and Reno would pay the 9 percent rate, with the difference funding the state’s problem-gambling programs.

I should note that my proposed plan would affect the family that owns the Las Vegas Sun. The Greenspun family and Station Casinos share ownership of Green Valley Ranch Station, Barley’s and The Greens in Henderson, and plan to share ownership of the proposed Aliante Station in North Las Vegas. All of their jointly owned casinos are in suburban locations. The Greenspuns also own a 6.82 percent stake in the Palms .

My proposed 5-7-9 plan (apologies to the mall-based women’s clothing store called „5-7-9“) would be close to revenue neutral, with most existing tourist and locals casinos paying only a quarter-point more than they now do . The additional revenue would fund the 1.75 percentage-point cut for casinos in downtown Las Vegas and Reno and in Nevada’s historic small towns.

Nevada’s economy – and Nevadans – benefit from the tourism economy that allows out-of-staters to pay for many of our services with their gaming losses and consumer spending, which generates gaming and sales taxes. No one should mess with that success. But lawmakers should consider tinkering with the casino top rate, and use the tools at their disposal to accomplish worthwhile social goals.

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