Power to tax is the power to destroy

In our nation's earliest days the main points of political argument were the relative powers of the new (circa 1789) federal government and those of the 13 states, which had had considerably more experience in governing than the former. Secession from the union was believed to be an option (until fourscore and seven years later), the armed forces were mostly state militias and states issued their own currency. Maryland precipitated an early test of this teetering balance of power by attempting to levy a tax on federal property located in that state. The secretary of the treasury sued to have the tax voided. In a case entitled McCullough vs. Maryland, the US Supreme Court threw the tax out on the grounds that states could not levy against the federal government because "the power to tax is the power to destroy"?

All Democrats, including Washoe County's assessor, should be required to read that case. However today's column is not for assessor-bashing but to comment on the results of the collective idiocy of Nevada's Assembly Democrats in the 2003 legislative session when they bulled through a special tax on banks . . . a payroll tax rate over twice what every other business in Nevada pays, plus a $7,500 annual fee for each branch office. To make things worse it turns out that the entire tax increase has proven unnecessary because legislators spent a great deal of the 2005 session trying to figure out how to return excess taxes collected to taxpayers.

This week we found out what happens when government singles out one industry for punitive taxes. Bank of America has announced that it is closing its office in Virginia City; the community's only banking facility. Yep, the Comstock, which once had as many banks as it had bars and brothels, is now without a place to deposit a paycheck. The 1,500 real Nevadans who live in that lively town will now have to go to Dayton or Carson City if they want to open a new account to get a toaster. Not only is Virginia City going to be bankless but Pioche and Beatty are also on Bank of America's branch closing list. What in the world was going on in the alleged minds of the Assembly Democratic Leadership Caucus that they would plug such a discriminatory provision into the last minute 2003 tax bill (which legislators readily admit not reading even though they voted for it).

"The power to tax is the power to destroy." Lawmakers should be required to repeat that phrase aloud ten times every day the legislature is in session. They should be required to chant it like a mantra every time some yahoo introduces a new tax bill. Just a smidgen of thoughtless legislative idiocy has resulted in a nationwide bank, headquartered in the Carolinas, finding that marginally profitable branches in far- off Nevada are now losing money and therefore deciding to close them. As a result, some 5,000 or so Nevadans will have to stuff their money in mattresses. In addition, the taxes attributable to those branches, which used to be collected before the new law was passed, are now lost to Nevada. Guess what all the sharp-pencil bean counters that work for banks with branches in Nevada are doing as you read this column.

How many idiots does it take to screw in a light bulb? There's plenty of raw material in the capitol to use to test that hypothesis every time the Legislature is in session.



Jim Clark is president of the Incline Village/Crystal Bay Republican Advocates. He also serves as chair of Independent Incline.