Local Bar and Restaurant Owners Discuss Margin Tax - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Local Bar and Restaurant Owners Discuss Margin Tax

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The midterm election is a little over a more than a month away, and one decision voters will be making is whether or not to pass the Margin Tax.  The measure would require businesses that gross more than $1 million in revenue to pay a 2% tax. Proponents say it will generate $650-$750 million for public education per year. But opponents say it will do more harm than good.

Great Basin Brewing Company employs more than 100 people at two restaurants and a brewery. Tom Young is the company's owner and says the tax would have a negative impact on small businesses like his because it taxes gross revenue instead of their profits.

"I would say an average restaurant makes 3.5%," Young said. "You take 2% out of that, even with the deductions, a little less than that and you simply take that income and cut it in half."

Opponents to Question 3 say some businesses owners could have negative profits, and still have to pay the tax. Karen Griffin is a spokesperson for the Coalition to Defeat the Margin Tax. She says that while a 2% tax doesn't sound like much, it's actually equal to a 14-15% corporate income tax rate.

"We call California a high-tax state but California's corporate income tax rate is just 8.8%," Griffin said. "So, that would be nearly double California's corporate income tax rate."

Doug Smithson is a school volunteer and proponent of the ballot question.

"Nevada is one of two states that doesn't have a corporate income tax and our schools rank at or near the bottom of every single school performance statistic that's ever been calculated," Smithson said.

Smithson says the tax will only affect about 15% of Nevada businesses. He says most of them are corporations and mining companies. He says implementing this tax is important for school kids.

"They're leaning on the wall and sitting on the floor and sharing outdated text books," Smithson said. "How are we going to have a workforce that's ready for the 21st century if this continues?"

Others say the tax could cripple small businesses and hurt the economic recovery,  saying it would hit 80-90% of the companies that are hiring workers.

"I'm the biggest supporter of education in this community," Young said. "I realize that we need to come up with a solution but this one is going to cost jobs and hurt the community."

Smithson says there are businesses that make tens of millions of dollars, in Nevada, that should have to pay more taxes. Griffin says every consumer would see prices go up on things like food, clothing and utilities because companies will pass the additional costs onto them.
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