FACTS ON THE EDUCATION INITIATIVE (TEI)

TEI Basics The Education Initiative would impose a 2% margin tax on business revenue. The margin is either: An entitys total revenue minus salaries or cost of goods, or simply, 70% of its total revenue, whichever is less. Businesses that earn $1 million or less will be exempt. TEI asks big business to pay their fair share. The funds raised through the Education Initiative will go directly to the Distributive Schools Account the education budget in the states general fund. TEI Works for Nevada A Nevada taxation study makes a policy recommendation for a margin-type tax proposing, Although income taxes in Nevada may not be politically feasible, we would be remiss to ignore business income taxation as one way to increase tax equity between Nevada businesses and "Nevada could add a simplified corporate income tax to other business taxes." The study also suggests its implementation would not "require a substantial increase in the scope of Nevada government. State revenue officials could rely on the federal system for much of the administrative burden." Texas Margin Tax Facts A margin tax was proposed by Democrats during the last legislative session. The Education Initiative is modeled after that proposal and is similar in function to a Texas margin tax. While commonly referred to as the margin tax, the formal name of Texas business tax is still the Texas Franchise Tax a tax that Texas has been levied in some form since the 1800s. Texas reformed the margin tax in 2006. A stated policy goal of the 2006 tax reform effort was to shift a portion of the tax burden from goods-producing industries to services-providing industries, and better reflect the fastest growing part of the economy. After several years of operation in Texas, there is no evidence that the margin tax offers much in the way of tax avoidance strategies; sorry no loopholes. A Center for Public Policy Priorities study of the Texas tax structure suggests an increase in the margin tax could raise state revenue to maintain public services and would not proportionately increase taxes born by Texas households. TEI Summary The Education Initiative will provide desperately needed funding and will keep dollars in the classrooms to help our children succeed in school The Education Initiative is the will of the people that will go forward. As it has been recently described in media reports, "The very existence of the petition forces the legislature to confront the tax problem or be left behind in deciding state tax policy." In Texas, the margin tax ultimately proved to be acceptable, not so much for the tax it was, but because of the tax it wasnt. It proves to be a tax that does not put further burden on middle class and poor families and small businesses.