In Fiscal Year (FY) 2016, Nevada collected $12.4 billion in state and local taxes—or $4,227 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average Nevada taxpayer can afford this level of taxation?
To better answer this question, this analysis will calculate Nevada’s tax burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.
Fortunately for taxpayers, as shown in Chart 1, Nevada’s state and local tax burden (tax collections divided by private sector personal income) was the twenty-fourth lowest in the nation for FY 2016 at 13.7 percent—or -4 percent below the national average of 14.3 percent.
#Nevada state and local #taxburden in FY 2016 was the 24th lowest in the nation at 13.7%— -4% below the US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #NVleg #NVgov #PolicyData (click to tweet)
As shown in Chart 2, Nevada’s tax burden has increased over time by 34 percent to 13.7 percent in FY 2016 from 10.3 percent in FY 1950.
As shown in Chart 3, Nevada’s 13.7 percent tax burden is greater than these combined industries: construction (6.6 percent), manufacturing (3.5 percent), and arts, entertainment, and recreation (2.5 percent).
#Nevada state and local #taxburden > combined industries: construction, manufacturing, and arts, entertainment, and recreation http://bit.ly/2FX9C8F @keypolicydata #NVleg #NVgov #PolicyData (click to tweet)
Nevada’s lower than average state and local tax burden is driven by not having an individual or corporate income tax as well as low property taxes (3.0 percent, 6th lowest), but that is partially offset by other high taxes such as the sales tax (5.5 percent, 6th highest) and all other taxes burden (5.2 percent, 4th highest)
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Nevada—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The 17 Nevada counties/cities local government tax burden include (from highest to lowest):
Note: Eureka County’s economy, and to a lesser extent Lander County, is predominately “mining, quarrying, and oil and gas extraction.” Most of these workers, however, live in surrounding counties where their income is attributed. As a result, the tax burden in these two counties is overstated.
Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?
Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.