Decent person's urge to do the right thing dumbfounds other children at biennial Carson City band camp

A legislative committee held a hearing the other day on Assemblywoman Peggy Pierce's bill to make mining pay some taxes for a change. After months of batting their big doe eyes at legislators during romantic dinners, pretending to be impressed with the intelligence and wit of lawmakers and otherwise softening up/wearing down your elected officials, mining lobbyists used the hearing to fill the air with artificial arguments and disingenuous diversions designed to lead the committee far off into the weeds and well away from any trenchant discussion. For the most part it worked, and questions asked of the industry's lobbyists tended to range from the innocuous to the irrelevant.

If Pierce's bill is ever sent to the Assembly floor and legislators vote on it, people would find out: What do elected officials value more, wealthy investors around the world with huge financial interests in multinational mining corporations, or Nevada?

Ha ha trick question. The answer is none of the above. What legislators value most is avoiding potentially controversial votes. Republican lawmakers in Clark County don't want to be accused of siding with multinational corporations earning record profits while Nevada education is deeply and irreparably damaged. Garden variety scaredy-cat Democrats don't want to be slammed for raising taxes. As it happens, the committee took no action on the bill, and unless and until it does, your lawmakers will be resting comfortably in their preferred habitat: off the hook.

Meantime, Pierce has also sponsored legislation scheduled to be heard in committee Tuesday that would establish a broad-based business tax.

At the hearing on the mining bill, industry frontman Tim Crowley reiterated mining's oft-asserted endorsement of a broad-based business tax. I think I speak for all of Nevada when I say I eagerly await Crowley's forceful testimony in favor of Pierce's bill Tuesday. I particularly look forward to the part when Crowley and other mining industry lobbyists openly and publicly urge Republican lawmakers, including and especially those from rural Nevada who have the closest and most dear relationships with mining, to defy Gov. Brian Sandoval and vote first for new taxes and then to override Sandoval's veto.

What? You doubt that mining lobbyists will say anything of the sort? You think that at most they'll announce they're neutral on the bill and mutter some vague support for broadening the tax base, and then the media won't press the industry to explain why it won't fight for what it keeps saying it believes in? Jeesh you people are cynical.

Anyway, back to that mining tax bill. The Nevada Spectator has loaded up audio bits from the hearing. I echo Spectator and strongly recommend that everyone listen to the exchange between Pierce and some Palindrone who apparently has spent his entire adult life under the delusion that transnational mining conglomerates give a shit whether Elko exists. I also recommend the remarks of PLAN's Michael Ginsberg, which were excellent. My testimony is on there too, but I've no indication that legislators listened to it so can't imagine why you should either. I will, however, publish my charts, for the chart-liking dorks among you, and for posterity:

1. This first one is a variation of a chart I've published before, but the point that I made to the committee, and that I hadn't teased out previously, is that 40 percent of the time Nevada's mines paid no mining taxes at all from 2000 through 2009, and for four of the first five years of that decade, more than half the state's mines paid no mining taxes at all, so jeepers the net proceeds tax is a failure:

In a fancifully contrived diversion highly favored by bullshit-flinging mining industry lobbyists, mining taxes are frequently compared to property taxes paid by homeowners and businesses. While discussing the chart above, I apologized to the committee for not knowing the percentage of home and business owners who paid no taxes at all on their property from 2000 through 2009, as was the case with mines 40 percent of the time during that decade. Always willing to acknowledge others' expertise, I suggested that perhaps the mining industry lobbyists had brought that information to the committee. If they did, they didn't share it. And legislators didn't ask mining to explain why it is fair tax policy when a large portion of taxpayers pay no taxes at all.

2. Nearly 90 percent of Nevada's mineral production is gold and only two companies account for more than 90 percent of that, remember? With that in mind, this second chart illustrates that there is no other nation on earth that is more important to these companies than the state of Nevada.

One could, s'pose, draw the conclusion -- especially under the current tax system (or lack thereof) -- that Nevada is more important to mining than mining is to Nevada. In Carson City, of course, that would not be called a conclusion, but blasphemy.

3. I told legislators that the point of this third chart was not to show that Barrick and Newmont are making oodles so gosh let's go get 'em. Rather, the point of the chart is to show that compared to the sheer size of these numbers -- the companies' combined net income is larger than the budget proposed by Sandoval, and their combined cash reserves are larger still -- the idea that a modest tax increase is going to drive corporations to scale back Nevada operations is really fucking stupid (OK, that's not exactly the phrase I used but maybe it should have been):

To paraphrase what I told your illustrious elected representatives: No place on earth is more important to the financial performance of both these companies than Nevada. And the companies are going to spend and invest in Nevada what they're going to spend and invest in Nevada based on market forces that are orders of magnitude more important than Nevada's trifling and dysfunctional mining tax. If mining's tax burden is increased, money won't be taken out of the state. Money will be brought to the state -- money that otherwise would have never even seen Nevada because it would just go toward puffing up the numbers on that chart.

But if the Legislature goes forward with Sandoval's budget cuts, lots and lots of people (especially in higher education) will definitely lose their jobs. And throwing all those people out of work will definitely hurt the economy.

No one cared about any of this stuff. The end.

Comments

[maven]

You have no idea how bad I felt for you, sitting there watching the committee and the lobbyists just not give a shit while you were bravely doing your bit.
Since it's clear that they didn't listen, or if they did, they didn't care, it seems to me that we're barking up the wrong tree trying to convince them of anything.
Any idea why gaming isn't adding any support to this? How might we get them to consider it?
Any ideas at all - I mean beside doing what we've been doing (and getting zip for results)?

[Mine Engineering Technician]

I thought it was interesting that Crowley tried to make the comparison that raising the tax would be like artificially inflating the value of one's house...

To think he could be so blind to the fact that next to the government, Newmont occupies an unnecessary 2,000,000 acres in Nevada, which decreases the inventory for available land that could go to other industries so Nevada had a more diverse economy. So, given that they have stripped Nevada of so much land, yes, they should not receive any more tax breaks. Besides, they already are receiving a break on royalties for their mining efforts on public land.

What is even more interesting is that the former Nevada Taxation Department Director resigned due to the inability to obtain the necessary resources to audit these mines. http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=122787&sn=Detail.

Yet, over the past several years, the mines may have inappropriately been classifying their employees' bonuses, which has allowed them to escape from paying out proper amounts in payroll tax.

Then look at the debacle that happened up in Elko with Newmont acquiring a number of shares in Queenstake. Then shortly thereafter, Newmont froze Queenstake's assets, and locked out their employees. Due to the monopoly Newmont has in the area, the miners were forced to go to work out there (or at Barrick) at a significantly less salary package than what they had. Then, recently, Queenstake starts back up after Newmont manipulated and depressed the labor market. It blows my mind that the SEC and the DOJ have not looked into this either, but chances are that they do not have anyone who knows a damn thing about mining...

Mining has changed since the 1800's, as it was not monopolized in Nevada by two out-of-state mining corporations back then. Things have changed, especially since Newmont acquired all of the land from Santa Fe. See:

http://www.thestreet.com/story/10279143/newmont-buys-queenstake-shares.html and

http://findarticles.com/p/articles/mi_qa5382/is_200809/ai_n30991759/ and

http://elkodaily.com/mining/article_40981e58-50e7-11e0-ac21-001cc4c03286.html?mode=story

Newmont now sits on 2,000,000 acres, their production is up, and the price of gold is up (over-inflated in my opinion), yet Newmont has not proportionately increased the number of job opportunities, or employees. So it seems they are mining more, with the same amount of workers. I highly doubt they are that efficient, and I'd be curious how many employees are inappropriately classified as salaried exempt, and thus not being paid overtime (also robbing the state and federal government of tax revenue).

Nonetheless, Newmont and PACs that Newmont contributes to, may have paid thousands into Sandoval and Reid's campaigns, so I really have my doubts as to any unfavorable treatment they would receive.

As an aside, have you ever looked at the difference in prevailing wages between Clark County and other Counties in Nevada? These politicians are not only determined prior to the election, but they appear to be personally benefiting from their law-making decisions.

Nonetheless, these breaks and favoritism to these out-of-state mining corporations needs to stop. Maybe with the revenue the State can hire more employees to audit these companies and keep them honest (or maybe Richard Mathews will retire). M.S.H.A. can't seem to keep them safe either. Yet, if you get a chance, take a look at some of the court documents filed in Elko County, and in Federal Court against Newmont, and you may see a completely different picture than what the Nevada Mining Associations has been able to paint through their PR campaigns. However, it appears that some miners are starting to stand up to their unethical practices: This is a video worth watching. This guy, and likely several others have experienced the same issue. However, it is very difficult to bring a class action in Elko due to the lack of attorneys in the area I'd imagine. http://longchange.com/

[Launce]

Great job, M.C. Gleaner, and well argued, M.E. Technician. The "artificially inflate" argument is particularly rancid. Let's be clear what we're trying to do: Take a small piece of the huge profit Newmont and Barrick make on EVERY OUNCE of gold - perhaps $35 bucks out of the $1,000 (probably more) in profit they make on every ounce. Listening to the lobbyists squeal, you'd think we were asking for their children. (I doubt they would squeal as loud.)

[Douglas Democrat]

A lot of whistling past the graveyard going on there in Carson City...

And Horsford's proposal to take the voter-approved 3% tax increases in Washoe and Clark for education is laudable.

Or it would be if it were actually directed at the areas under threat rather than in areas that aren't really "must-do" (early childhood, after school and summer programs, and adult ed) when compared to laying off educators, increasing class sizes, and hamstringing school districts' ability to repair or replace deteriorating infrastructure.

[Goldy]

So for fun, let me show you why the "get mining" attitude hurts Nevada. Below is an example of a typical family of 4 with Mom and Dad working at the same company:

*Mom and Dad make $50,000 each
*They live in a $200,000 home
*They have $3000 per month in discretionary income to spend on non-food, non-medical sales taxed goods
*They drink 2 bottles of expensive wine per month and they smoke.

As you can see, the State loses @$7400 per month on a Zappos employee and the Nevada is ahead @$5000 on a Barrick company. I know my finance degree from UNLV is not exactly a Wharton MBA, but please tell me why progressives think that "getting mining" is where the focus should be for the best interest of the state?

If the Canadian overlords would agree, any lobbying would be done in cities and counties around the state. Every overpaid lobbyist would begging local officials to deny licenses and permits to any non-gaming, non-mining business. They are costing this state a fortune and we are giving them tax breaks to come here! This is what my progressive brothers and sisters don't seem to get: "getting mining" may slightly increase that subsidy (debatable), but it does not get at the real problem. It's like complaining that the soup is cold and service is bad on the Titanic. If my progressive peeps win, they can get the soup taken off the bill and not have to leave a tip either. Maybe that is not the most important thing for the Titanic passengers...???

Zappos Employee Barrick Employee
Property tax $2,608.20 $2,608.20
GST $238.00 $238.00
Sales Tax $2,970.00 $2,970.00
MBT $700.00 $700.00
Gaming Tax $- $-
Net Proceeds of Mines $- $12,500.00
Insurance premium tax $- $-
"Sin" taxes $500.00 $500.00
Total Tax $7,016.20 $19,516.20

Exp. 2 kids school $14,000.00 $14,000.00
Exp. 1 CC class $500.00 $500.00
Total Expense $14,500.00 $14,500.00

Difference to State $(7,483.80) $5,016.20

And yes, I don't think mining was in the room supporting the bright, capable Peggy Pierce's bill for a net profits tax. But it's not because mining does not support net profits. It's because that being effective is knowing the political landscape. And if the Senate Majority Leader does not support it--http://www.lvrj.com/news/state-senate-s-leader-drops-2010-s-call-for-corporate-income-tax-117137198.html --perhaps its not good politics to spit in his eye.

We progressives have been called many things; unfortunately, "effective" is not one of them. When can we play the politics of addition? When can we back off of our extreme positions and work together for Nevadans?

Maybe mining has something to give, maybe other progressives have something to give too. But why get it by hitting each other over the head with a chair on the deck of the Titanic when we could go together to the bridge and steer clear of the iceberg?

Or we can just get those out of state corporations taking our natural resources. Waiter, my soup is cold...

[Bob Fulkerson]

Goldy-
No one is fooled by your smokescreen.
You and your mining buddies were hiding under the covers during the hearing on the business tax, so please spare us with your sermonizing.

[Goldy]

Sorry Bob. No sense dealing with reality.

Just to be sure, whenever you want to talk about working together, let me know.

Keep up the work.

[checking the math]

If I understand Goldy, and honestly I don't understand much of what he was trying to get at with his 6:59 post, Zappos should be charged $12,500 for a state business license (equivalent to Goldy's reported Net Proceeds of Mines sum), and that equates to $7,483.30 proceed to the state per each Zappo employee; do I have that right? Does Zappos have only 1.67 FTE in Nevada?!

[checking the math]

DETR reports 9,700 metal ore miners as of February 2011. Maybe we are supposed to multiple the number employed by $7,483.30 to learn how much each miner is contributing to Nevada? Okay, that equals $72,588,010.

Wait, Economic Forum December 1, 2010 Forecast, concludes that ALL mining tax revenue (including natural resources and mining), will be $60,200,000.

If we allow for all of the $60.2m to be attributed to metal ore miners exclusively then each of them is worth $6,206.18 more to the state than a Zappos employee.

Solution: Supply Viagra to the metal ore miners (at least for the 75% of employees that are male), so they can have more miner offspring OR conscript the Zappos employees into the gold mines until they pay off their $6,206.18 debt.

Now if we could get those metal ore miners to match retail employees (123,800) who each add $13,067.04 ($1,617,700,000 in sales tax) to the state, then we could say they are pulling their weight in gold!

[Goldy]

Oh @ checking the math, it's no wonder you think a tax increase on mining will solve the State's problems. You don't understand them.

What I am trying to point out is that the only businesses in this state that don't COST the state money are mining and gaming companies. Oh, unless you count businesses that hire people who don't have children or old parents. And if they smoke, drink, and gamble, the state really likes them too.

The tax Zappos and any other company pays to the State--the MBT--is so low, it does not cover the cost of their family to the State. In order for the State to attract and retain any other businesses, we have to do what PLAN and Gleaner want: tax mining and gaming. It is that simple.

Because there is no business tax, any business that brings in employees with kids in public school, relatives on Medicaid, and requires safety inevitably is a loss leader for the State. Economic diversification, from a State tax perspective, is simply a burden on gaming, mining, and insurance companies.

Yes, retailers collect sales tax when there is a nexus in Nevada. But be honest, what is the driver of that sales tax? Gaming. Mining pays a ton too. Since our sales tax base is so narrow, it is still a weak argument to say thats good tax policy. Basically, outside of gaming, we are taxing dinner at Olive garden and non-food items at wal-mart that people basically need to buy.

Zappos and any other business in Nevada should pay something, just like the miners and gamers have for years. And if you think that increasing the tax on mining or gaming is doing anything to address the real problem, you are mistaken on every level. Miners, gamers, and progressives should be working arm and arm to address the real problem--a faulty tax system.

But Bob, Gleaner, Douglas, et al constantly say, the only thing that matters is that mining should pay more. If I were Executive Director of PLAN, my first calls would be to the executives of gaming and mining companies and I'd say, "How can we help fix this?"

Also, to check the math, "Economic Forum December 1, 2010 Forecast, concludes that ALL mining tax revenue (including natural resources and mining), will be $60,200,000" is the STATE portion of NPOM. Double that and it is what the industry paid. 2011 will be closer to $150 million and they had to pre-pay it. Barrick alone wrote a check for over $100 million.

And if breaking down the comparison to a common unit like "per employee" escapes your intellectual ability, I am sorry. It is not an uncommon way to analyze things.

I know, I know, ignore every valid argument and stay it together: "Goldy, you're an idiot mining whore." "Let's get mining!"

Groundhog Day

[checking the math]

@ Goldy:

I have to say that if you are as in effective in listening in Carson City as you are on this site, you do not serve your employer well. Numerous people here, including those you mention, have ALL advocated broad based taxes-no one has written that mining alone should or could shoulder it all. That said, many people believe that mining has gamed the system for years. You make it easy for some to say, if mining doesn't like here they can leave; it's a supply and demand thing.

BTW, you are the one that premised your argument exclusively on STATE revenue per employee and not me.

""Goldy, you're an idiot mining whore." "Let's get mining!" As you wish.

Been groundhog day for decades, why should 2011 be any frickin different?

[Goldy]

Not premised on State tax. Property tax was included.

[ctm]

Well, today, the LV Sun has published Mining's Mea Culpa. "Sorry we ripped off the Nevada tax payer", says mining spokesperson Tim Crowley.

I bet someone will come on this site and state that 'Mining' was not in the room when state employees engaged in malfeasance-writing regulations that far exceed what is permissible in law. NAC, as regards mining, is comprised of numerous "ultra vires" provisions, of which, not covered in today's SUN article is the non-statutorily approved "compensation" package. NRS does not use the word "compensation", it uses the term "salaries", and thus excludes 401K et.al. programs.

I believe that state employees that engage in ultra vires NAC writing should be terminated pending a proper hearing.

As for Goldy:

1. "...that don't COST the state money";

2. "The tax Zappos and any other company pays to the State....";

3. "the best interest of the state":

seems STATE revenue was the basis of your argument.

[Goldy]

The math works either way: gaming and mining subsidize other businesses in this state. Economic diversification is a straw man. You can attack the problem one of two ways: increase the subsidy or decrease the subsidy. I applaud mining for trying to decrease the subsidy by supporting a broad based business tax. I am concerned my fellow progressives spend most of their energy trying to increase the subsidy and make the problem worse.