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Job killer or school savior? Battle brewing over proposed tax | News

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Job killer or school savior? Battle brewing over proposed tax

LAS VEGAS -- In the coming months, you will be hearing a lot of debate about a tax measure on the November ballot.

Supporters call it the education initiative, while opponents call it the margin tax.

The business community has opposed it from the beginning, and late last week, the AFL-CIO also came out against it, but many teachers believe it can save our schools.

If voters give the go-ahead, businesses that make a $1 million or more will pay a two percent margin tax.

It is a tax on business revenue that would raise millions for Nevada public schools. Both sides are gearing up for a battle at the ballot box.

A factory in Henderson is where key components of slot machines are born. VSR Industries makes 1 million slot machine locks, 60,000 metal slot machine bases and the company manufactures 4,000 slot machines every year.

VSR Industries partner Colt Vollman has concerns about the education initiative, or margin tax.

"The potential impact to VSR would be about $150,000 a year that we would have an additional taxation, if that initiative was passed," Vollman said.

VSR opened in Nevada in 1969, but not far away, Lake Industries moved its kitchenware company to Nevada from California, just three years ago

"Not only the taxes, but the regulations and the inspections, it became to the point that if we wanted to expand, we weren't going to be able to do it in California," general counsel for Lake Industries Robert Tzall said.

Lake Industries fears the margin tax is a recipe for disaster.

"It is going to take Nevada from one of the lowest tax states to one of the highest tax states," Tzall said.

Ruben Murillo, president of the Nevada State Education Association, sees it a different way. His trade union backs the tax to raise money for public education.

"Potentially, $800 million a year." Murillo said, "We're in it for the kids,"

Murillo says there are misconceptions.

"That it is a job killer. That it is a flawed tax that doesn't really do what it is supposed to do. Those are all myths," he said.

Mike Pequeen, with the wealth management firm Hightower Las Vegas, says the education tax will spell trouble.

"The margin tax is potentially a job killer." Pequeen said, "It is a flawed tax that can destroy our fragile economic recovery."

"With a higher-educated population, jobs are going to come," Murillo said.

While companies wait for the will of the voters, the battle is brewing.

"There will not be the incentive to come here for low taxes. It will hurt that tremendously," Pequeen said.

"We have a lot of examples of companies that didn't come to Las Vegas because of the fact that our education system is bad," Murillo said.

Between now and decision day, Nevadans will all be getting a lesson in whether this measure is good or bad, a fix or a failure.

The non-profit, bipartisan Guinn Center for Policy Priorities says that a more reasonable estimate the tax would generate for schools is $460 million, and not $800 million.

The Coalition to Defeat the Margin Tax Initiative, backed in part by the Las Vegas Metro Chamber of Commerce and the Nevada Resort Association, says the margin tax would hurt both major employers and small businesses and is a "deeply flawed and unfair tax system."

Supporters say Texas has a margins tax that is working, but opponents say Texas' economy is very different than Nevada's.

At any rate, the TV ads will soon begin, all leading up to election day, November 4.