A person doesn’t need an advanced degree in either economics or finance to figure out that the current versions of the Tax Bill are not good for Nevada. We’ll begin with the premise that the Republican tax plan gives the majority of the benefits to corporations. High income individuals would also benefit from the elimination of the Alternative Minimum Tax, and the Estate Tax. We should also note that the individual/family tax cuts would expire in 2027 while the corporate tax cuts are made permanent. Additionally, we should accept the proposition that because of the fluid nature of the proposals and the complexity of how middle income families may be affected, the NY Times analysis is probably one of the best generalization summaries to date. We can say with some certainty that the vast majority of the benefits will accrue to the upper 2% of American income earners, and to corporations.
Another point often overlooked in the various summations is what the bill will not do. This element should not be ignored as we try to imagine what the ramifications will be for Nevada and its citizens. First, a reminder of the obvious —
Nevada depends on the leisure and hospitality sector — our way of saying gaming, which is our way of saying gambling and the hotels that provide the entertainment. In hard cold stats — the BLS reports employment as follows: Leisure and Hospitality – 353.8 yoy +2.0; Trade, Transport, Utilities – 242.6 yoy -0.5; Professional and Business Services 191.1 yoy +5.9; Government – 163.0 yoy +2.3; Education and Health Services – 134.4 yoy +2.9. Little wonder most people are employed in the “Hospitality” sector, the Las Vegas Convention and Visitors Authority reports some 32,108,552 visitors as of the end of September 2017. Each visitor averaged about $619 spent on “gaming.” [LVRJ]
And now to state the obvious — that $619.00 spent at the tables or playing the slots is literally disposable income. We intend for our visitors to dispose of it during the time they spend in Las Vegas. Not to mince words, anything that restricts disposable income has a direct impact on the total taxable gross revenue generated by our “hospitality.” For example, in 2007 Las Vegas (Clark County) enjoyed gaming revenue totaling $10,868,464,000. As the housing bubble burst in 2008 the number declined to $9,796,749,000. As of 2009 with the Recession deepening, the number fell to $8,838,261,000. The last report, issued in 2016 reported gaming revenue in Clark County of $9,712,796,000, a good number, but still below the halcyon days before the Bubble and Crash.
If Nevadans had adopted the notion that gaming is a “recession proof” industry before the Wall Street Casino wiped out the Housing Market, we were disabused of the idea in the wake of the last debacle. There was, obviously, a limit to the capacity of our visitors to save our bacon.
And now, we have a Republican tax plan which gives most of its benefits to upper income earners, and corporations, and eventually leaves middle income earners (those earning between $30,000 and $100,000) holding the bag awaiting immediate or eventual increases. What happens to that average $619 budgeted for the tables and slots when a family has to adjust to higher health insurance premiums? When a family is no longer able to deduct major medical expenses? When a family can no longer deduct interest payments on student loans? When a family finds it can’t deduct state and local taxes?
Years ago Nevadans would sing the praises of the “$60 bettor.” High rollers are, of course, always welcome, but those $60 bettors were the prime rib in the Nevada casino buffet — the staple, the predictable, the profitable. Decades later the $60 increased to $619, and these vacationers and tourists are still the staple, the predictable, and the profitable. Make inroads into their disposable income and they will have less of it to dispose of at the tables and slots.
An economic policy which further rewards the already successful at the expense of the middle class, that would add a return to financial institution deregulation, and would compound the problems by eliminating or reducing the deduction of mortgage interest, is a recipe almost strategically designed to have a negative impact — another negative impact — on Nevada’s economy.
Going a step further, someone is going to have to make up the massive $1.5 trillion hole created by the Tax Plan. What will Nevadans have to sacrifice? Their Social Security? Their Medicare? Their Medicaid? What then of the now increasing education and health care services sector in Nevada? What of the construction trades in Nevada, the builders and the contractors? They’ve seen this movie before and it didn’t end well.
And yet we have one Senator who appears to have purchased the Trickle Down Hoax hook, line, and sinker; who appears to believe the Growth Fairy will wave her magic want and make all things whole — including that $1.5 trillion gap — and one who believes that balanced budgets are paramount except when it’s the GOP blowing the deficits into the stratosphere. It is time to tell Senator Heller that we have all seen this script play out, and instead of buying into the Trickle Down Hoax he’d do better to purchase some chips from the cashier and donate his $619 to the Nevada economy. Otherwise we’re looking at more Bubble Bubble Crash and Trouble.
Senator Heller’s office: 202-224-6244.