There’s an old meme that floats around particularly anti-authoritarian circles from time to time about how 40 percent of police officers don’t beat their spouses — 40 percent of police officers are reported for beating their spouses. The implication (admittedly based on statistics from three decades ago, so please consume with a generous pinch of salt) is that the actual number is much higher.
In related news, the reported unemployment rate is 28.2 percent.
Especially on Memorial Day weekend, a weekend dedicated to honoring those who died in combat (even if they were fighting against us; I’ll let bygones be bygones when they do), it’s easy to get despondent right now. Yes, we can go outdoors, barbecue, and meet in groups of ten or fewer people now, but we don’t know for how long — in either direction. We can visit our families, but we probably shouldn’t unless we live with them. Those of you who go to church can go to church as long as you do so online.
Before any of Nevada’s faithful scoffs, I’ll note that, while you’re probably reading this, I’ve been participating in a Zoom webinar with over 1,000 Libertarians and have been since Friday afternoon. It took us an hour to accept our list of credentialed delegates. It took us more than four hours to adopt an agenda. I know what Hell looks like. I’m already there. If we can do it without divine intervention, so can you.
As easy as despondency might be under the circumstances, there is hope in catastrophe. It’s true that, per both Google’s and Facebook’s tracking data, people are traveling much less than they used to. If the situations in Europe and East Asia are any indication, this will undoubtedly last for quite some time. It’s also true that Nevada’s casinos are opening slowly, almost one at a time. It’s also true that tourism is roughly a third of Nevada’s economy. Put the two together and it’s clear that, whether we want to or not, we’re about to fix that — one way or another.
Thinking facetiously, if most of our casinos refuse to reopen, tourism and its supporting industries will become much less than a third of Nevada’s economy by definition, in much the same way I would lose a third of my weight if I chopped my legs off. Less facetiously, however, Nevada has struggled under something of a resource curse. Due to our overreliance on tourism, Nevada has faced the same issues oil-rich and resource-rich countries struggle with — underinvestment in other industries, exposure to price swings (especially in housing), and concentrations of wealth that discourage the equitable application of the rule of law (just ask Elon Musk or the Raiders).
This isn’t an original observation. It’s an observation Nevadans have made about ourselves for decades. Even going to college in Reno at the turn of the last century, while Reno’s tourism economy was collapsing due to increased competition from new casinos in California, I had classmates who dropped out because they could make more money parking cars or dealing cards than they thought they would with a college degree — and they could make it right then, instead of waiting four or five years to get their bachelor’s. There’s nothing wrong with that; I’m certainly not the sort who would begrudge anyone from acting rationally in their economic self-interest. However, parking cars or dealing cards are very unique, nontransferable skills that don’t translate particularly well to other fields.
The good news is a lot of Nevadans, whether motivated out of necessity or boredom, will find ways to bring value to those around them and get paid for it. Many Nevadans are sewing masks and selling homemade goods, for example. The bad news is few of those ways will be particularly steady or reliable, at least in the short run, especially since much of our workforce is specialized in fields that just vanished with barely a trace. The worst news of all is most of the ways Nevadans may ultimately find value for themselves will be ways that can be done just as easily anywhere else. That’s a problem since, due to our state’s unique revenue model, Nevada and its municipalities are frankly brutal to the self-employed.
This may come as a surprise given Nevada’s business-friendly reputation. Yes, Nevada doesn’t have an income tax. Nevada also enjoys relatively low property taxes. Nevada’s commerce tax, meanwhile, only applies to businesses with a gross revenue exceeding $4 million per year.
What Nevada has instead is fees. Lots and lots of fees.
For example, let’s say you’re unemployed and decide you want to start a small home business in Sparks (the details are a little different in Reno or Las Vegas, but the basic principles are still the same). If your side business earns less than $1,000 per year, you owe the City of Sparks $6 for an avocational permit; if it earns more than that, however, you’ll owe the city $80 plus an additional dollar for each $1,000 in gross receipts in excess of $10,000. If gross receipts exceed 66 ⅔ percent of the average annual wage in Nevada (or $32,500 in 2020, at least before COVID-19 undoubtedly reduced that), the state of Nevada also requires an additional $200 for a state business license. Note that this doesn’t include municipal licensing fees for specific industries, work permits, or other additional licenses — like, for example, the one Sparks requires to operate a teenage dance hall.
For larger companies, these licenses and fees extract a modest portion of their revenue. For self-employed contractors working gig to gig, however, fees rapidly consume a large portion of the money they earn. $80 paid from a side business grossing $1,001, for example, is a nearly 8 percent effective tax rate before even taking expenses into account. A contractor earning $33,000 in gross receipts, meanwhile, would pay $200 to the state and $83 to Sparks, for an effective tax rate of 0.8 percent. A business collecting $330,000 in gross receipts, on the other hand, would continue to pay only $200 to the state plus $112 to Sparks, for an effective tax rate of 0.09 percent.
Bear in mind that gross receipts aren’t the same thing as profit; they only reflect money received, not whatever money was spent to make that possible. Also, the examples explored above aren’t comprehensive, especially for general contractors or other tradespeople.
Nevada, it turns out, is business-friendly — big business-friendly. What we need to become if we’re going to get out of this, however, is self-employer friendly. That means simplifying our thicket of municipal, county and state licenses and permits so everyone can understand the rules, reducing the up-front costs for fees, and permanently clearing away any legal impediments that prevent Nevadans from working from home. If we pull that off, we won’t just get Nevadans back to work, wealth and prosperity — we might just break our tourism-induced resource curse once and for all.
David Colborne has been active in the Libertarian Party for two decades. During that time, he has blogged intermittently on his personal blog, as well as the Libertarian Party of Nevada blog, and ran for office twice as a Libertarian candidate. He serves on the Executive Committee for both his state and county Libertarian Party chapters. He is the father of two sons and an IT professional. You can follow him on Twitter @DavidColborne or email him at [email protected].