ECONOMIC AND FISCAL POLICY REPORT - The FairTax Act of 2023: Potential Implications for Nevada

The FairTax Act of 2023 proposes a “rate of tax [that] is 23 percent of the gross payments for the taxable property or service” in 2024 (this rate seemingly increases in subsequent years). [...] Moreover, any changes to the State Sales Tax, or the two percent rate, would have to be approved by the voters under the Nevada Constitution, which requires that any statute initially passed by the voters – in this instance, the Sales and Use Tax Act of 1955 – not be amended without being returned to the voters. [...] Quantification of the number of families that could fall into this gap would be useful, particularly as some will be just over the threshold Figure 1: Projections of the Older Adult Population in where income gains would not offset the retail Nevada % of Population sales tax in the absence of an allowance. [...] Were the FairTax Act of 2023 enacted, the question for Nevada is whether macro-level income effects would offset consumption costs and the extent to which the effects, if any, would be amplified or muted in accordance with economic expansion and contraction, respectively. [...] Proceeds from the Local School School Support Tax (LSST), or the School Support Tax, are obtained Support Tax, from the levy of the 2.6% component of Nevada’s minimum 60.6% statewide sales tax rate.