The COVID-19 pandemic was a public health and economic crisis that hit nationwide, but perhaps no place suffered the economic effects of the pandemic more than Las Vegas, and Nevada as a whole.
Our state’s dependence on tourism, the service industry and the movement of people were especially ill-suited to weather restrictions that slowed the spread of a contagious virus. Businesses and workers in our state are just now starting to recover. Unfortunately, Congress is considering a new business investment tax targeting carried interest that would be devastating to Latino businesses that have suffered for the past 18 months.
A 2021 paper from the Brookings Institution found that, compared with other cities, Las Vegas faced substantially higher unemployment at the end of 2020. Specifically, Las Vegas had the fourth-highest unemployment rate of any metro area in the country, rising from 3.6% in November 2019 to 11.5% in November 2020. The Reno area has also seen a sustained increase in unemployment.
Brookings also found that COVID-19 has been especially hard for workers and businesses in the leisure and hospitality sector, with tourists forgoing vacations while restaurants and live event venues had to adhere to lockdowns and limited capacity. Nationwide, 16% of workers in the leisure and hospitality sector are unemployed. In Las Vegas, more than a quarter of workers are in this sector and have suffered from a 41% decrease in hotel room occupancy rates, a near standstill of the lucrative corporate conference industry, and a 52% drop in overall tourist visits to Southern Nevada.
The same study also found the areas suffering most from the COVID-19 pandemic “tend to have larger Hispanic or Latino populations as well.”
“Thus, the pandemic’s economic geography magnifies existing disparities, exacerbating the racial wealth gap for Hispanic or Latino families,” the study says.
This is because Latino workers and businesses tend to concentrate in service industries or businesses that have limited access to capital. Prior to the pandemic, only 11% of small businesses in majority-Latino communities nationwide had more than 14 cash-buffer days.
The Latin Chamber of Commerce of Nevada represents more than 1,500 members of the state’s business community. Part of my role in the organization is to educate lawmakers and the public about policies that create jobs and grow Latino businesses.
That is why I am urging lawmakers to oppose the business investment tax, which would hurt the Latino community and slow Nevada’s recovery from the ongoing and devastating COVID-19 pandemic.
The tax is supported by lawmakers such as Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Bernie Sanders, I-Vt., and targets carried interest, which incentivizes investments in businesses and real estate projects. Enacting this tax would make it harder for Latino businesses to get private investments they need to hire workers, grow their operations, or simply keep their doors open in tough economic times.
In 2020, more than 71,000 workers across Nevada were employed by businesses that received $3.3 billion in private investments that would be targeted by this tax. These investments are often the only source of capital for minority-owned businesses that either struggle to get bank loans or often pay higher interest rates.
The investments targeted by this tax also generate strong returns for public pension funds, which support thousands of first responders, teachers and other dedicated public servants. The business investment tax would also reduce funding for housing construction projects, making it harder for real estate developers to build affordable housing.
Businesses across Nevada have a lot of work to do in the months and years ahead. Nevada lawmakers such as Reps. Steven Horsford and Susie Lee, and Sen. Catherine Cortez Masto have stood up for Nevada businesses and workers by supporting emergency relief funding during the pandemic. I urge them to continue standing up for struggling Nevadans by opposing the business investment tax before it is included in the upcoming $3.5 trillion budget proposal. Our jobs and businesses depend on it.
Peter Guzman is the president and CEO of the Latin Chamber of Commerce of Nevada.