Why Nevada must hit the brakes on taxes

It’s called voting with your feet.

A remarkable number of well-heeled Americans are doing just that, and it should serve as a warning to Nevada voters and candidates as we enter an election year. Though Republican governors in recent years have shepherded through the Legislature record-high tax increases, Nevada still fares fairly well in comparison to other states when it comes to the tax burden borne by citizens of the Silver State.

According to the Tax Foundation’s analysis of state and local tax burdens per capita for fiscal year 2012 — which is after Gov. Kenny Guinn’s billion-dollar tax hike but before the $1.5 billion tax hike pushed by Gov. Brian Sandoval — Nevada ranked 43rd lowest in the nation, while neighboring Taxafornia ranked sixth highest.

Nevada tax collectors grabbed 8.1 percent of the state income through state and local taxes or $3,349 per capita. Meanwhile, California snatched 11 percent of state income or $5,237 per capita.

Perhaps that explains why, according to Internal Revenue Service data on taxpayer migration, from 2014 to 2015 about 10,500 Nevada taxpayers moved to California, while 17,700 California taxpayers moved to Nevada. Even more telling is the fact that the Californians fleeing to lower-taxed Nevada averaged $91,000 in gross adjusted income, while the Nevadans heading to California averaged only $47,400 in adjusted gross income.It seems people with higher income have a tendency to find ways to keep more of it for themselves.

From 2014 to 2015 Nevada netted an increase in total adjusted gross income reported to the IRS of $1.43 billion. Of that, $1.1 billion came due to the influx of Californians changing residencies.

An analysis of a sampling of that IRS data shows the California-Nevada migration pattern is no anomaly.

In that one year, the state of New York, which has the highest state and local tax burden of any state at 12.7 percent of income and $6,993 per capita, lost $4.4 billion in income.

No. 2 highest Connecticut lost $1.3 billion in income. No. 3 highest New Jersey lost $2.46 billion. No. 5 Illinois lost $3.47 billion. No. 6 California lost $2.09 billion. Meanwhile, state income tax-free Texas, ranked 46th lowest, added $3.61 billion, and state income tax-free Florida, though only 34th lowest, added $11.65 billion. The latter might have something to do with weather as well, since $2.62 billion of that came in from former New Yorkers, $1.49 billion from former New Jersey residents and $1.47 billion from former Illinoisans.

The New Jersey residents who moved to Florida had an average income of $121,000, while Floridians moving to New Jersey averaged $72,500.

This is hardly surprising nor a new phenomenon. In an article in The Wall Street Journal in 2009 under the headline, “Soak the Rich, Lose the Rich,” economist Arthur Laffer and WSJ economics writer Stephen Moore updated previous studies and found that from 1998 to 2007, more than 1,100 people every day of the year relocated from the nine highest income-tax states — such as California, New Jersey, New York and Ohio — mostly to the nine tax-haven states with no income tax — including Florida, Nevada, New Hampshire and Texas.

Laffer and Moore determined that over that period of time the no-income tax states created 89 percent more jobs and had 32 percent faster personal income growth than the high-tax states.

“Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair?” they asked. “No. Dozens of academic studies — old and new — have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.”

A recent WSJ editorial noted that billions in income are still flowing out of New York, New Jersey and Connecticut and into Florida.

“As these state laboratories of Democratic governance show, dunning the rich ultimately hurts people of all incomes by repressing the growth needed to create jobs, boost wages and raise government revenues that fund public services,” the editorial concluded.

Voting with the feet is sure to increase since the recent tax reform limits federal income tax deductions for state and local taxes.

Let this be a lesson for Nevada. Chase the rich, they’ll run away.

Thomas Mitchell is a longtime Nevada newspaper columnist. You may email him at thomasmnv@yahoo.com. He also blogs at http://4thst8.wordpress.com/.

Sign Up for Email Updates

Get the latest news, alerts, and more from The Ely Times straight to your inbox.


  1. Glen Saunders says:
  2. Bret Demers says:

    Where exactly are these rich Nevadans you are talking about in this article?

    The most recent census data for White Pine County reported a 15% poverty rate. That’s nearly 2 in 10 people.

    The poverty rate for all of Nevada is nearly 14%. The state has poor social saftey nets in place which are constantly threatened by tax cuts, both on a national or state level.

    The lesson for Nevada should not be that “chasing the rich” makes them flee. The lesson should be what the hell are we doing with our tax revenue now and how can we improve statewide salaries.

    Cutting taxes is not the answer to making your citizens richer. It’s the answer to making your state’s liveability poorer.

    People might be moving from CA to NV to escape a few thousand dollars of income tax but they are moving to border towns such as Vegas or Reno where emerging industries are available and the entertainment industry is strong.

    In other words, if you live in Silicon Valley working as an entry-level Engineer pulling in $150k/year, you’re not moving to Eureka to save money on taxes because you CAN’T MAKE MONEY IN EUREKA BECAUSE THERE ARE SHITTY JOBS.

    There are shitty jobs because there aren’t any in-demand industries in most NV towns no matter how little you have to pay in income tax.

    Mining doesn’t count; simply take a drive through Goldfield to see how that industry has panned out.

    Just because a business provides “jobs” does not make them good jobs that propel people to higher pay grades, especially in already poor areas.

    As anyone who has ever driven through Nevada can attest, there is widespread abject poverty throughout the state.

    People don’t “save” any more money through individual tax cuts and they don’t reinvest the money into the state in smart ways.

    Shopping at your local Walmart with your extra tax money is NOT improving the local economy. Walmart will still pay terrible wages regardless of their profitability.

    This is what tax cuts do no matter what political platform your state votes for:

    — Tax cuts impact schools, libraries and educational programs that provide the skills to get jobs in the first place and the education needed to reach higher salary positions
    — Tax cuts means less funding for healthcare facilities
    — Tax cuts means less help for seniors, disability services, children and the poor
    — Tax cuts impact law enforcement services
    — Tax cuts impact civil necessities such as water treatment plants and roadways
    — Tax cuts impact civil servant JOBS such as firefighters, policemen, judges, teachers.

    Education helps people get jobs. Not businesses saving money on their profit margin because corporate tax rates are low.

    Businesses hire talent, not people. If Nevadans don’t have the education, guess what? They don’t get hired no matter how many jobs are available.

    Nevada is in bad shape and one of the poorest states in the nation.

    DC, New York, Connecticut, Massachusets, Delaware, Calfornia are in the top 10 richest states despite having a high-income tax rate.

    Clearly, the income tax is not hurting the earning power of those residents.

    Might I point out, too, that these top earning states are also Democratically inclined. Their education systems, infrastructure, civil services, and healthcare access are also some of the highest in the nation.

    The 30 poorest states — which includes Nevada — are mostly Republican.

    Politics don’t matter. Policies do.


    • Goldfield?! You actually equate the modern mining industry, the second largest employer in the state (and the first in much of rural Nevada), to Goldfield? I might ask if you know anything at all about mining, or anything further beyond pro-tax (Elizabeth Warren) screed and a general love of other people’s (money) tax dollars, but clearly you do not.

      So long as you’re so deeply in love with tax revenue, you might pull your head out of the Kool-Aid trough long enough to consider the total tonnage of it generated by mining (and related industries), while also considering that to a great extent such obtuse posturing largely invalidates your argument (in 2015, Nevada mining companies paid $91.8 million in NPOM taxes).

      Further consider that taxes are literally other people’s hard earned money – it doesn’t magically appear in support of your particular vision of utopia.

      However, and I rarely say this sort of thing, do feel absolutely free to relocate to one of those various ‘superior’ states awash in unreasonably high taxes compliments of your stilted, socialistic reasoning. From the sound of things you’d be far happier not having to spend one more minute among the great unwashed of the Silver State (Sorry, pesky historic revenue generating mining reference again).

      Beyond that, this paper is not your bully propaganda pulpit or your personal blog – maybe a few hundred words less next time? Just a suggestion.

      (P.S., Trump’s various economic successes as president must be making you absolutely crazy right about now.)

      For further actual information regarding what mining already brings to Nevada before idiots manage to tax it to death:


      It’s full of great little gems, like “The average annual earnings for employees in metal ore mining was $96,668 in 2015, as compared to statewide average earnings of $45,760.” Just imagine how much additional tax those jobs already generate through employment, subcontractors, and the trickling down though commerce when they buy things (supporting other businesses in rural Nevada). You just gotta love capitalism.

Speak Your Mind