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FOUR THE NEVADA TAX R E V ^W It is interesting to note the varyin g percentages o f bene­fits p aid out to taxes paid in, in the table fo r the eleven W e ste rn States. It w ill be noted from this table that N e v a d a has paid out in benefits a larger percentage o f the taxes paid in than any o f the other W e ste rn States, and almost double the percentage paid out fo r the U n ited States as a w h ole. Since the p ay ro ll tax rate is generally u n iform under the federal and state laws, there must be some explanation fo r the relatively h igh rate o f benefits p aid in N e v a d a . H o w ­ever, because w e do not k n o w the particular circumstances o f each state, w e can only speculate as to the real cause. Nevertheless, there are three m ajor points, each o f w hich could have h ad a great deal o f effect on the percentage o f benefits paid. First, since the benefits paid, as sh ow n in this first table, include funds collected fro m railroads and later trans­ferred to the R ailro ad Retirem ent B oard, it is very p robable that this w o u ld have a greater effect in N e v a d a than in the other ten W e ste rn States, o r in the nation as a w hole. T his is because the railroads are such a la rg e part o f ou r state­w id e economy, em ploying m ore people than any other single industry affected in the past by this tax, except the m ining industry. Second, because the m in in g industry, which, as an indus­try, is the largest contributor in the state, is a h igh ly specu­lative business, and is particularly sensitive to the demands o f the m etal market, there is from time to time a large fluctuation in em ploym ent in the industry. T h erefore, it is to be expected that em polym ent conditions in this large in ­dustry w o u ld have considerable effect on the operation o f the unem ploym ent compensation fu n d in N e v a d a . It is not so m uch the la rg e established mines that cause a large fluctuation in em ploym ent as it is the m argin al producers an d the prospecting and developm ent w o rk w hich is so essential to the industry. T h e third point has p roven to be true, partially at least, by experience. T h is point is that the N e v a d a law , as it g o v ­erned the eligibility o f applicants fo r benefits, as com pared to other states, has been too liberal, especially w h en the m igratory nature o f a la rg e section o f the N e v a d a labor supply is taken into consideration. T h e effect o f am end­ments passed by the 1941 state legislature substantiates this point. T h e state la w w as am ended to cut d o w n the benefit payments to claimants w h o h ad w o rk ed in N e v a d a fo r only a short period o f time, and to extend the disqualification period fro m a m axim um o f six weeks to a m axim um o f sixteen weeks fo r those claimants w h o voluntarily leave em ploym ent o r w h o are discharged fo r misconduct, or w h o fa il to accept suitable em ploym ent w h en offered. F or the first tw o weeks after these changes became effective on July 1, 1941, 10.4% o f the benefits claimed w ere eliminated. These claims w o u ld have been p aid under provisions o f the la w be fo re it w as am ended. I f this percentage o f decrease carries th rou gh consistently, it w ill help to b rin g the N e v a d a percenatge o f benefits paid out to taxes paid in m ore into line w ith the other W e ste rn States. A s conditions stood in the trust fu n d transactions before these changes w ere made, the average percentage o f benefits paid out to taxes paid in fo r the eleven W e ste rn States w as 53.78% com pared to N e v a d a ’s 76.34% . Because o f the very la rg e surplus rem aining in this fu n d fo r the nation as a w h ole, there has been some talk in C o n ­gressional circles o f cutting the em ployers p ayroll tax from 3 % to 2 % . W h ile this cut appears practical on a nation­w id e basis, it certainly w ill not be practical fo r m any o f the in dividu al states. F rom past experience, it w o u ld not be practical fo r N e v a d a . H o w ever, the federal la w could be changed to a llo w the individual states to adjust the tax to local conditions. A ctu al collections in N e v a d a fo r the fiscal year from July 1, 1940, to June 30, 1941, w ere $68,794.55 less than the actual benefits paid out. Collections d u rin g the period that benefits have been paid, that is, since January 1, 1939, have been approxim ately $160,000.00 less than benefits paid out. T h is happened d u rin g a period w hich can be classed as nearly norm al fo r prosperity and employment. Such a condition, o f course, could not continue fo r lo n g before the surplus bu ilt up in the tw o and a h a lf years o f collec­tions before benefits w ere paid w o u ld be depleted. H o w ­ever, if the 10.4% reduction, m ade possible by new am end­ments to the state law , in the first tw o weeks o f operation under the n ew provisions continues, the fu n d w ith the tax as it n o w stands w ill be m ore than self-supporting. H a d these provisions been in effect d u rin g the past fiscal year, col­lections w o u ld have exceeded benefits p aid by approxim ately $40,000.00 instead o f the actual condition w hereby benefits exceeded collections by nearly $69,000.00. O n this basis, these n ew provisions o f the la w should cut benefit payments by w e ll over $100,000.00 a year. A n oth er sign o f the im p rovin g conditions o f this fu n d is the w ay benefit payments have fallen o f f d u rin g the first six months o f 1§41. D u rin g this period, according to the state auditor, 47,361 benefit checks w ere issued. O f this total, 10,713 w ere issued in the peak m onth o f February, w hile only 3,992 w ere issued in June. W e can expect this trend to continue fo r the duration o f the N a tio n a l D efense boom . Every indication is that a substantial surplus w ill be es­tablished in the N e v a d a fu n d over the next fe w years. W h ile it is to be expected that a heavy drain on the fu n d w ill come d u rin g the readjustment period, nevertheless it w o u ld not be wise to bu ild up too large a surplus. A surplus to take care o f an abn orm al lo ad fo r tw o or three years should be sufficient. W it h careful, conservative administration, it may be possible to make a substantial adjustment in the payroll tax rate in the near future. (C on tin u ed from P age T w o ) ever. T h e la w provides that each case shall receive $10 additional aid, and that the counties cannot reduce the am ount o f aid they w ere at the time granting. T h e State W e lfa r e D epartm ent, in its study o f an A id to B lin d p ro ­gram under the Social Security Act, estimated that it w o u ld cost about $60,000.00 a year, divided between federal $24,- 000, state $18,000 and counties $18,000. This, o f course, w o u ld b rin g practically every mature blin d person in the state under the program . G E N E R A L R E L IE F T h e cost o f G en eral R elief, provided entirely by the counties, am ounted to 30.71% o f the total expenditure fo r direct relief. In addition to this sum o f $348,138.79, the state provided $2,308.78 in G en eral R e lie f through the N e v a d a Emergency R e lie f Adm inistration. O f the relief provided by the N .E .R .A ., about h a lf w ent fo r cases recom­m ended to it by the State C h ild W e lfa r e Service and the rem ainder w ent to needy cases o f a tem porary nature not provided fo r by the several counties. T h e G en eral R e lie f provided by the counties, as show n in the table, covers cash payments, indirect and in kind, or, in other w ords, rent, groceries, fuel, etc., m edical care, hos­pitalization and burials. These figures are not entirely ac­curate. Because some o f the counties have difficulty keep­NEVADA TAX REVIEW FIVE in g records fo r some o f the costs and since all o f them do not compute costs on the same basis, it was necessary to make estimates in many cases, particularly fo r the cost o f hospitalization o f indigents _ P E R C A P I T A C O S T S Per capita costs are not a generally accepted measure­ment o f per unit costs o f w elfare _ T h e usual measurements used are the costs per case fo r each type o f assistance. H o w ­ever, fo r an over-all picture o f public assistance, and as a measurement o f the relative w elfare load fo r each county, w e feel that per capita costs are w e ll w orth presenting. F rom the table it w ill be noted that per capita costs range from a lo w o f $5.94 fo r D o u g la s County to a high o f $19-82 fo r N y e County. T h e state average is $10.28 per capita. O n ly eight o f the seventeen counties exceed this state average. T H E D I V I S I O N O F C O S T S T h e division o f costs between the federal government, the state governm ent and the counties is 32.43% , 16.42% and 51.15% in the same order. T h e division on a per capita basis o f the $10.28 state-wide per capita cost is $3.33 fe d ­eral, $1.69 state and $5.26 counties. It is interesting to note the relative burdens fo r each o f the counties on each $100 o f assessed valuation. W h ile the state gets the funds it spends fo r w elfare purposes almost entirely from the property tax, these figures, however, are fo r the county provided funds only. F or w elfare purposes, the taxpayers in the various counties are paying from 13 cents per $100 o f valuation in D o u g la s and E lk o Counties to 85 cents per $100 o f valuation in N y e County^ F or the state as a w h ole, the taxpayers pay . 29 cents per $100 o f valuation fo r county w elfare expenditures. F or the funds spent by the state, the taxpayers can add another 9 or 10 cents fo r each $100 o f valuation. It must be remembered that these costs do not include the cost o f administration. It is very likely that the taxpayers can add another 2 or 3 cents to cover that cost. C O N C L U S I O N In m ak in g this b rie f study o f public assistance in N evad a, w e w ere startled by the diffused m anner in which Public W e lfa r e is bein g administered. W ith o u t d ig g in g too deeply, w e fo u n d over-lapping, duplicating organizations and lack o f coordination am ong services, which, i f coordinated, could save substantial amounts o f tax dollars. O n the other hand, w e also fo u n d that m any o f the agencies are doin g an excel­lent jo b according to the provisions o f the la w by which they are governed. H o w ever, w e are not g o in g to under­take to make recommendations concerning w elfare adm in­istration at this time. W e w ill reserve that study fo r a future date w h en the issues can be brough t before the legislature. Nevertheless, since w elfare activities have g ro w n to such a large part o f the over-all pattern o f governm ent, in fa ir­ness to the taxpayers w h o foot the b ill and to the needy persons receiving the benefits, the w elfare p rogram cannot be given too much study or too much attention. W H A T ’S A H E A D F O R T A X P A Y E R S V ario u s estimates o f the extent o f the federal tax p ro ­gram fo r the year 1942 place the tax b ill at approxim ately 121/2 billions o f dollars. State and local taxes, continuing on the present level, w ill am ount to approxim ately 9 billions o f dollars. T h is w ill make the total 1942 tax b ill within the U n ited States over 2 U/2 billion dollars. T h e expenditure side o f the balance sheet w ill tell a story even m ore drastic. Estimated federal, state and local expen­ditures fo r the year, according to reliable sources, w ill reach approxim ately 31 billions o f dollars. T h e amount o f expen­ditures w ill be equal to approxim ately 33 or 35 per cent o f the estimated national income. T H E P R O S P E C T F O R N E V A D A T h e im portant thing fo r N evad an s is to k n o w just h o w this tax b ill w ill affect them. W e can expect that the state and local tax b ill fo r 1942, all types o f taxes included, w ill amount to about 11 m illion dollars. T h e federal tax bill fo r 1942 on the new tax basis not yet enacted should amount to w ell over 8 m illion dollars. These are the taxes collected direct in N e v a d a , such as income taxes, social security taxes and some miscellaneous taxes. W e can add to this at least another 3 m illion dollars in taxes w hich are not col­lected in N e v a d a but which nevertheless w ill be paid by consumers here. T h is brings the federal fax b ill fo r N e v a d a up to the level o f the state and local b ill o f about 11 m il­lion dollars, m aking a total fo r federal, state and local o f approxim ately 22 m illion dollars. T h is figure is w ithout a doubt conservative. I f w e take the rising income into con­sideration, it may not be excessive to place the com bined tax b ill at 25 m illion fo r 1942. B y w ay o f comparison, this b ill w ill be equal to a property tax levy o f between $11.00 and $12.50 per $100.00 o f the 1941 assessed valuation in the state. I N C O M E A N D O U T G O A pproxim ately 7,000,000 persons paid a federal income tax last year, w hich is about the only direct tax paid to the federal governm ent. A t the same time, 12,682,663 persons w ere getting non-defense m oney direct from the federal treasury in the form o f salaries, farm or other subsidies, relief payments and other direct benefits. These persons receiving non-defense m oney direct from the federal treas­ury are classified as fo llo w s : C ivilian Federal Em ployees.......................... ........ 1,173,663 A gricu ltu ral A djustm ent A dm inistration farm benefits.................... ............ ......... ............. ............ 6,000,000 W o r k s Progress A dm inistration_________ ________ _ 1,500,000 N a tio n a l Y o u th Adm inistration........................... 800,000 C ivilian Conservation C orps................... ............. .. . 260,000 In digen t aged, mothers o f dependent children, and other direct (n on -in suran ce) Social Se­curity beneficiaries................................................. 2,949,000 T o t a l . ____ ...._________ . _____ ... .._____ ______.12,682,663 T h e fact that most o f these 12,682,663 people are voters, or directly affect votes, p robably accouts fo r the reluctance o f Congress or the Adm inistration to take the initiative in g o in g all out fo r non-defense economy. It becomes a mat­ter o f w hose toes are g o in g to be stepped on and w h o is g o in g to do the stepping. O n e encouraging factor in the proposed n ew tax b ill is that if the proposal to lo w er income tax exemptions to $1500 fo r m arried persons and $750 fo r single persons is passed, it w ill add another 6,000,000 voters to the direct tax-paying list, his w ill b rin g the payers and the receivers to a near balance, w hich no doubt w ill have a tendency to make some politicians economy m inded. C A N Y O U T H I N K O F A N E W O N E ? Forty-tw o per cent o f the revenues o f all governm ent units in 1939 w ere collected from taxes w hich didn ’t even exist 40 years ago, according to the Citizens P u blic E xpen ­diture Survey o f N e w Y o rk .