Archive for the ‘Nevada’ Category

One Year In

Thursday, December 6th, 2012

Nevada Flag

One year ago, I announced my move from, as Joe Kristan put it, “the perfumed air and divine weather of Orange County to the desert wastes of Nevada.” A friend asked me to expound on my move, both the good and the bad.

There isn’t much that’s bad for me to report on. My electric bill is painful in the summer; my July bill went up over 4000% [1]. I don’t have grass in my front lawn (but even in Irvine that was an issue). There’s nothing particularly old or historic to see in Las Vegas. When the historic relics are the old casinos such as the Golden Gate [2], historic items are few and far between.

There’s a lot, though, to love. I was told that I wouldn’t know my neighbors, that people aren’t friendly, and that it’s a transient community. I know my neighbors (who are very nice people), people went out of their way to introduce themselves, and while there are definitely transient neighborhoods (especially areas very hard hit by the housing bust), I live in a typical suburban neighborhood. I have a lot more house than I did in Irvine at a lot less cost. The cost of living here is less, and my state income tax bill is almost zero [3]. I’m reconnecting with friends who moved here, and I’m having fun.

The biggest surprise to me is that I’m doing far less driving than I used to. Las Vegas, like Orange County, is full of strip malls. Indeed, the area I live in (Summerlin) is modeled after Irvine. The Las Vegas valley is smaller, and the distances less. This ends up being a big saving. This is especially true when you add in the cost of gasoline; it’s $0.20 a gallon cheaper here than in California [4].

Knowing what I do now, would I have made the move? Absolutely–and maybe faster.

Notes:
[1] In Irvine, I rarely needed to run the air conditioning (I lived near the ocean which provided free air conditioning). I signed up for Southern California Edison’s air conditioning cycling program. That caused my summer electricity bills to fall by almost 90%. Here in Las Vegas, I have a larger home that must be air conditioned. In the summer, the air conditioning runs at all hours. I knew that I would have large bills…and it wasn’t a surprise.

[2] The Golden Gate Casino, originally the Sal Sagev, is Las Vegas’ first casino. It’s downtown at 1 Fremont Street. They have a great shrimp cocktail special ($1.99, though you must join their slot club for this price).

[3] Nevada has no state income tax. I will have to pay a small amount of Maryland income tax this year because of our Maryland office; it’s likely under $100.

[4] All gasoline is imported from other states into Nevada (there are no oil refineries in Nevada). Yet even including shipping costs you pay less for gasoline here than in California. The obvious (and true) conclusion is that state taxes drive up the cost of gasoline in California.

Nevada Business Tax Initiative Ruled Invalid

Wednesday, October 24th, 2012

Judge James Wilson in Carson City ruled that a proposed tax increase initiative authored by Nevada teachers is invalid. Judge Wilson ruled that the description of the initiative was deceptive and misleading.

Nevada tax ballot measures work differently than in most other states. If enough signatures are gathered on the initiative, then the measure is submitted to the next session of the state legislature. Nevada’s legislature meets every-other-year (in odd-numbered years), so a petition that gets submitted in 2013 won’t actually get in front of the legislature until 2015.

The legislature then must consider the measure. If the legislature agrees to it, then it becomes law. If not, it then is submitted to a vote of the people in the next regular election (held on even-numbered years). So a petition that is submitted in 2013 won’t get voted on until 2016. But I digress….

The ballot measure would have imposed a margin tax on businesses in the Silver State. Needless to say, large businesses weren’t happy with the idea and opposed the measure. A legal effort was mounted charging that the description of the initiative was misleading so it can’t be submitted to the legislature. This is the second time the initiative’s language was ruled to be misleading.

While the ruling can be appealed, this effectively means that the earliest the legislature would consider such a tax is 2016.

Why I’m Happy to be in Nevada and Not in California

Tuesday, October 9th, 2012

The Tax Foundation released its 2013 State Business Tax Climate Index today. Last year, I was a California resident; in the 2012 Index, California ranked 48th out of 50 states. I now reside in Nevada, which ranks 3rd out of the 50 states. In this case, 3rd is third best. Here are the top ten:

1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. Washington
7. New Hampshire
8. Montana
9. Texas
10. Utah

And the bottom ten:
41. Maryland
42. Iowa
43. Wisconsin
44. North Carolina
45. Minnesota
46. Rhode Island
47. Vermont
48. California
49. New Jersey
50. New York

This just a listing based on taxes. If we added in regulations, California might even fall to 49. (Based on what I know of New York, it would be difficult for the Bronze Golden State to hit bottom.) States showing the best improvement were Michigan (which went from 18 to 12) and Maine (from 37 to 30). Michigan is especially notable because its corporate ranking went from 49th to 7th!

Taxes and regulations matter. On Monday, the Tax Foundation released a map showing annual income lost and gained due to interstate migration in 2009:

Annual Income Gained or Lost due to Interstate Migration

Shock of shocks, New York and New Jersey are in the top ten of loss of income back in 2009. Michigan was worst off (remember, Michigan’s tax system was horrible); Montana was best followed by South Carolina. Low tax states generally did quite well, with Florida #3, Wyoming #4, and Arizona #5.

Returning to the state business tax climate, taxes matter. Kudos to the Tax Foundation for their vital work. As the Tax Foundation stated in their report,

Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state’s economy. Most importantly, taxes diminish profits…

States do not enact tax changes (increases or cuts) in a vacuum. Every tax law will in some way change a state’s competitive position relative
to its immediate neighbors, its geographic region, and even globally…Entrepreneurial states can take advantage of the tax increases of their neighbors to lure businesses out of high-tax states

Las Vegas Attorney Accused of Tax Evasion and Structuring

Sunday, September 23rd, 2012

On Wednesday, I attended an all-day continuing education seminar put on by the Nevada Society of Enrolled Agents. This happened to be the annual IRS liaison meeting, and a hot topic was the indictment of Randolph Goldberg. This was especially true given we were treated to a presentation from local IRS Criminal Investigation (CI) agents. (They did not state anything about this case, of course.)

Mr. Goldberg is accused of keeping two bank accounts. There’s nothing wrong with that. However, he’s being accused of only including the deposits from one of the two accounts on his tax returns. Adding to his troubles is that he’s being accused of “structuring” bank deposits. Structuring is adjusting your bank deposits of cash deliberately so as to avoid currency transaction reports (CTR). If you make a deposit of $10,000 or more of cash, the bank will file a CTR. Mr. Goldberg is being accused of structuring bank deposits 147 times.

Mr. Goldberg is accused of four counts of tax evasion and five counts of structuring. He pleaded not guilty to the charges on Thursday. He was released on his own recognizance; his next hearing is in late November.

It takes effort to get in trouble with CTRs — so many of them a year are issued. Interestingly enough, one of the tidbits that CI gave us is that in August of this year there were 808 Suspicious Activity Reports (SARs) received in Las Vegas. (I believe, but am not 100% certain, that is the number issued by banks and casinos here in Las Vegas.) IRS CI told us that they have investigated or are investigating every one of the SARs.

SARs are issued when a bank or casino thinks their may be suspicious activity going on. For example, a SAR is likely to be issued if you make an $8,000 cash deposit in the morning and another $3,000 cash deposit in the afternoon. People don’t like dealing with CTRs because their issuance usually takes an extra 30 minutes at the bank. Assuming that one or more SARs lead to the investigation of Mr. Goldberg (which is very likely), he could spend far longer than 30 minutes at ClubFed.

A Golden Ending

Sunday, September 23rd, 2012

Walter Samaszko, Jr. passed away in May of this year. He had been a recluse, and when odors started emanating from his Carson City, Nevada home, neighbors called the authorities. They discovered his body. No one knew his relatives were, so the house was cleaned out by the Clerk-Recorder’s office before the modest home (listed for just over $100,000) could be placed on the market.

They found quite a surprise: Austrian ducats, South African Kruggerrands, English Sovereigns, and US $20 gold pieces. All told, the gold is valued at about $7 million. The estate will be subject to the federal estate tax–the exclusion amount this year is $5.12 million–so the IRS will get about around $750,000. A first cousin in the San Francisco Bay Area will get the rest (after probate fees are paid), likely around $6 million. It doesn’t hurt that the current price of gold is just under $1,800 an ounce.

Another Survey, Another Bad Result for California

Wednesday, May 30th, 2012

Yet another survey puts California among the worst three states from a tax perspective. Alvarez & Marsal Taxand, a consulting and tax advisory firm, surveyed 800 financial executives (302 responded). Among the questions asked was Which states do you view as most competitive from a tax perspective? The usual suspects finished on the bottom: California, New York, and New Jersey. As Alvarez & Marsal Taxand noted, “…the states generally viewed as having complex tax systems and high tax rates are the three states listed (by a wide margin) as the least competitive states.” Alvaraz & Marsal Taxand Managing Director Don Roverto told the the Orange County Register, “The feedback from clients who do business in California is that it has one of the highest combinations of high rates and complex systems and that’s why it’s at the bottom.”

It’s also not a surprise which states finished at the top: Texas, Florida, and Nevada. These states all feature a tax exclusion or non-income tax based system.

Perhaps California will consider tax simplification, lowering rates, and making businesses feel wanted. Of course not–the Bronze Golden State will have one or two tax hike proposals on the November ballot.

Another Survey, Another “F” for California

Thursday, May 10th, 2012

While Governor Brown and others in the Bronze Golden State continue to debate how to increase taxes, perhaps they’ll look at yet another survey which shows that California is at the bottom for business (among US states). With thanks to the TaxProfBlog for noting this, Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation released a survey of small business owners of which states were the best for business.

Receiving “A+” grades were Idaho, Oklahoma, Texas, and Utah; receiving “F” grades were California, Hawaii, Rhode Island, and Vermont. The three worst performing cities were all in California: Los Angeles, Sacramento, and San Diego. The top three cities were Oklahoma City, Dallas/Fort Worth, and San Antonio. Nevada received a “B+” while Maryland received a “C-“. Las Vegas ranked 10th of the 40 cities surveyed.

The interactive map is available here while the full survey can be found here. A press release on the results is also available.

Best States for Entrepreneurs: South Dakota, Texas, and Nevada Lead the Way

Sunday, April 22nd, 2012

The Small Business & Entrepreneurship Council released last Monday their 2012 Business Tax Index. There aren’t many surprises when you look at the list of best and worst (at least, for regular readers of this blog). The top seven states have no income tax on individuals. Meanwhile, the usual suspects (with one exception) are on the list of the bottom ten.

First, the top ten:
1. South Dakota
2. Texas
3. Nevada
4. Wyoming
5. Washington
6. Florida
7. Alaska
8. Alabama
9. Ohio
10. Colorado

The bottom ten has a lot of the usual high-tax “Blue” states:
42. Connecticut
43. Hawaii
44. Vermont
45. California
46. Maine
47. Iowa
48. New York
49. New Jersey
50. Minnesota
51. District of Columbia

I was surprised to see Minnesota so low on the list. Minnesota has a high capital gains tax rate; that, combined with its relatively high personal income tax rate, inheritance tax, and the state’s AMT, led to it being near the bottom of the list.

I also need to compliment Michigan. I’ve been down on the state–at times, saying it has been worse than California–but the SBEC ranks the Great Lakes State number 12. Under a Republican governor, Michigan has improved its tax policies.

For those wondering why I’m now in Nevada rather than California, this is just another measure of the problems with the Golden State. Governor Brown and Democrats in the state are discussing measures to further increase the state’s taxes. Well, there are six more spots to go before reaching the top (worst) position!

The SBEC has a nice interactive map showing the 50 states (plus DC); you can view the map here.

Bozo Tax Tip #6: Nevada Corporations

Thursday, April 5th, 2012

A repeat for the fifth year follows, but it’s one again getting a lot of play due to business conditions in California. While I’m focusing on California and Nevada, the principle applies to any pair of states.

Nevada is doing everything it can to draw businesses from California. Frankly, California is doing a lot to draw businesses away from the Bronze Golden State. But just like last year you need to beware if you’re going to incorporate in Nevada.

If the corporation operates in California it will need to file a California tax return. Period. It doesn’t matter if the corporation is a California corporation, a Delaware corporation, or a Nevada corporation.

Now, if you’re planning on moving to Nevada incorporating in the Silver State can be a very good idea (as I know). But thinking you’re going to avoid California taxes just because you’re a Nevada corporation is, well, bozo.

I Was #254

Wednesday, March 14th, 2012

Investors Business Daily has an article today on the Sick Man of America: California:

In 2011, more businesses (254) quit California than the year before (202), which was a high-water mark over 2009 (51). Last year, roughly five businesses left in any given week, one more than left in each week of 2010 when the average was 3.9.

Well, as one of those 254 businesses that fled the Bronze Golden State, I can say that Nevada has been a wonderful change. California may have a far better meteorological climate but from a business standpoint Nevada is far, far better.

What does California need to do to improve its business climate? Cut regulations, cut taxes, cut the pervasiveness of government. What are Governor Jerry Brown and the Democrats in Sacramento proposing? More taxes, more regulations, more of the same.

I’ll take the over on 254 for 2012.