As political leaders search for ways to balance the state budget, it's no secret they've been taking a hard look at mining.
Nevada gold mines are among the biggest and most profitable in the world, producing billions of dollars worth of bullion each year. Should they pay more in taxes?
The mining companies know they're in the crosshairs, and when you look at their bottom line, it's easy to understand why. But mining has gone through so many booms and busts in Nevada history that the industry wants to remind lawmakers of all that it pays now.
Elko County is mining country. The evidence is everywhere. Income from mining not only supports local government but pretty much every business in town. The tires sold at one store are clearly not intended for a family minivan.
The county is home to some of the largest and most profitable mines in the entire world. Soon, a fledgling project called Cortez Hills will be one of them.
"We have a very big deposit, upwards of eight million ounces at this point," said Lou Schack with Barrick Gold.
Eight million ounces of gold at the current price of more than $800 an ounce. You do the math. In the very same valley, Barrick Gold has an even bigger mine from which it has already extracted more than 10 million ounces.
It's no wonder that many in budget-strapped Nevada are casting glances in the direction of big mining. The miners say they already pay plenty.
"We as an industry paid over $200 million in taxes in the most recent year we have records for. We have an agreement now to pay our taxes in advance to help the state get through this hardship. We pay large amounts of taxes in the local community as well as the commerce we generate," said Schack.
In general, Schack says, mining pays its workers better than any other industry in the state, including full medical benefits, 401K's, scholarships for the kids of employees, and it pays taxes per employee far in excess of what any other business pays.
But critics say there's a reason mining giant's Barrick and Newmont can afford to be generous, since nearly everything they spend can be written off -- everything from employee benefits to fire insurance to marketing is deducted from their income before state taxes are computed.
Organizations like the Progressive Leadership Alliance, hoping to avoid more cuts in social services, think mining isn't paying nearly its fair share.
Nevada has a tax rate of 5-percent on the net proceeds of minerals, including gold. Since the price of gold has doubled in the past two years, that tax might be expected to prop up the state treasury.
The reality is different. Over a seven year period, Nevada mines produced more than $25 billion worth of gold, but paid a mere $125 million to the state, an effective tax rate of .5-percent.
Nearly 80-percent of their expenses were written off, allowing even the two largest mines to report zero taxable value in some recent years, years in which they produced huge amounts of bullion.
In 2007, Nevada miners produced more than $5 billion in gold but paid only $30 million to the state, less than 1-percent of the overall budget.
Critics say that the mining companies will take everything they can and when the gold runs out, so will they, leaving behind large holes, both literal and figurative.
But is it risky to raise taxes on one of the only industries in the state that is doing well these days? At some point, there is a danger of diminishing returns.
Mining companies have said they are willing to chip in, but they resent being singled out, "We feel we pay substantial taxes in Nevada, an elsewhere, and we don't feel it's fair to be targeted. However, if there is a careful examination of the tax structure in Nevada that looks at all business, all sources of revenue, that's the kind of approach we need to see."
As curious footnote, the Nevada Constitution specifically limits the tax percentage to be paid by mining. Those who want mining to pay more say they don't want to change the Constitution, they just want to eliminate all the deductions that have been added by previous legislatures, deductions that provide gold miners with advantages that not even oil companies get.
To their credit, mining has agreed to come to the table and talk about paying more, which is something other leading businesses in our state have completely avoided.
The county is home to some of the largest and most profitable mines in the entire world.
But critics say there's a reason mining giant's Barrick and Newmont can afford to be generous.
Nevada has a tax rate of 5-percent on the net proceeds of minerals, including gold.
Since the price of gold has doubled in the past two years, that tax might be expected to prop up the state treasury.
