Nevada economy on the rise, but we can’t be complacent

Sat, Apr 29, 2017 (2 a.m.)

Nevada recently hit a major milestone when for the first time in 10 years, its jobless rate fell to 5 percent as all sectors of the state’s reported job gains.

For a straight 54 months, Nevada’s job growth has outpaced the national job average. Add in a business-friendly environment — no corporate income tax and low property taxes — and you can see not only why Nevada companies are thriving, but more are flocking here. Case in point: The Oakland Raiders’ recent announcement that the team will be moving to Las Vegas.

Considering how the state was hit especially hard by the recession, Nevada’s economy has improved by leaps and bounds. But while Gov. Brian Sandoval lauded the positive job numbers, he cautioned, “We must remain vigilant in our efforts to continue bringing high-wage, quality employment to the Silver State.”

The governor is correct to advise Nevadans to not rest. There is much that can be done to continue this economic success and boost the nation’s economic bottom line as well.

With a paltry 1.9 percent growth reported at the end of last year, the nation’s economy hasn’t had quite the stellar recovery as Nevada. So it’s heartening to see President Donald Trump and leaders in Congress focus on job creation, increased investment and regulatory reform.

The National Black Chamber of Commerce supports a plan that encompasses each one of those goals — the House of Representatives’ tax reform blueprint titled “A Better Way” This blueprint will lower tax rates for individuals, small businesses and corporations, level the global playing field for American businesses, encourage new business formation, and end tax discrimination against domestic manufacturers and other businesses.

Small business is among the key drivers of job creation, accounting for about 65 percent of new jobs across the U.S. In Nevada, small businesses employ more than a third of the state’s private workforce and account for fully 95 percent of all employers. But to ensure the state’s economy achieves its full potential, America’s corporate tax rate must be lowered from the highest in the developed world — currently 35 percent versus a worldwide average of 22.5 percent.

Equally critical, the tax treatment for American imports and exports must be fair and balanced. While many of our global competitors exempt their exports from their value-added tax, there is no similar provision in the U.S. tax code. This means our global trading partners have an unfair tax advantage over American-made goods; Our exports carry a higher cost in the global marketplace.

Right now, if a company makes a product in the United States and sells the product overseas, it is required to pay taxes to the U.S. on the profits from the sale. But under a border adjustment — as outlined in the House blueprint — exporters would no longer be penalized for paying taxes for products sold to other countries.

On the flip side, under the current tax code, if a foreign company sells a product in the United States that was produced overseas, it currently doesn’t pay taxes to the U.S. on the value of the imported product. But under a border adjustment, foreign companies would no longer enjoy tax advantages when they sell products here.

Opposition to tax reform is hardly new; Those who know how to game the tax code resist change. Some critics of the plan, including large retailers who import a lot of what they sell, are marketing horror stories about how border adjustment will harm consumers. But what really harms consumers is a broken tax system that incentivizes foreign companies over Nevada companies. Our elected leaders in Congress should prioritize the interests of the state’s consumers who desire low prices on products, and the state’s workers and the businesses that employ us.

By exempting exports from U.S. taxes, the border adjustment would initially create higher demand for U.S. goods and U.S. dollars. At the same time, by taxing the value of imported products, the border adjustment would initially create lower demand for foreign goods and foreign currencies. Together, the nonpartisan Tax Foundation found these two effects would cause the value of the dollar to rise significantly. Under standard economic theory, the rise in the U.S. dollar would leave importers — and the American consumers they serve — unharmed.

Nevada’s federal elected officials should work with their colleagues in Congress and the Trump administration to achieve comprehensive tax reform that encourages business creation, the hiring of more American labor and levels the playing field for U.S. enterprise. It’s time to build on Nevada’s success and secure its economic future.

Harry C. Alford is president and CEO of the National Black Chamber of Commerce.

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