Jonah Patel
The Nevada Constitution, which has been amended several times, prohibits taxes on certain properties, including agricultural and open-space real estate, motor vehicles, and personal property in transit. It also prohibits inheritance and income taxes and ensures that religious worship and freedom from slavery are protected. The document also addresses the right to suffrage, the regulation of commerce, and the role of the federal government in taxation.
| Characteristics | Values |
|---|---|
| Inheritance and income taxes | Prohibited |
| Lands belonging to citizens of the US residing outside Nevada | Can never be taxed higher than the land belonging to the residents |
| Lands or property in Nevada belonging to the US | Cannot be taxed unless otherwise provided by the US Congress |
| Personal property in transit to a final destination outside Nevada | Exempt from taxation |
| Motor vehicles | May be exempted from taxation |
| Lands appropriated for public use | Cannot be taxed |
| Poll tax | Repealed in 1972 |
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What You'll Learn
Income and inheritance tax
The Nevada Constitution includes several provisions that prohibit the state from imposing certain taxes, and one of the most significant of these prohibitions is on income and inheritance taxes. This means that the state of Nevada cannot levy a tax on the income of individuals or businesses, nor can it tax inheritance, which is a worldwide practice.
The absence of an income tax in Nevada is a key feature of the state's tax structure and has been a defining characteristic since its admission to the Union in 1864. The state's constitution, in Article X, Section 1, explicitly prohibits the imposition of a tax on incomes of any kind. This means that residents of Nevada do not have to pay tax on their wages, salaries, or any other form of income, which is a significant benefit for those living and working in the state.
The prohibition of income tax in Nevada has had a significant impact on the state's economy and has influenced its development over the years. It has made Nevada an attractive destination for businesses and individuals seeking to minimize their tax burden, and has contributed to the growth of industries such as gaming and tourism, which have flourished in part due to the state's favorable tax environment.
Similarly, Nevada's Constitution also prohibits the imposition of inheritance taxes, which are levied on the transfer of property after an individual's death. This provision is outlined in Article X, Section 5 of the state constitution, which specifies that "no tax shall be imposed upon the right to receive or succeed to property passing by...gift, devise, or descent." This means that heirs or beneficiaries of an estate are not required to pay taxes on the value of the inherited property, which can include real estate, financial assets, or personal belongings.
The absence of an inheritance tax in Nevada can have several implications. Firstly, it can simplify the process of estate planning and administration, as heirs do not need to worry about the tax implications of inheriting property. Secondly, it can help ensure that the full value of an estate is passed on to the beneficiaries, without any reduction due to taxation. Finally, it can encourage individuals to establish residency in Nevada, particularly those with substantial assets who wish to maximize the value of their estate for their heirs.
In summary, the Nevada Constitution's prohibition of income and inheritance taxes has significant implications for the state's residents and those seeking to establish residency. It provides a favorable tax environment that attracts businesses and individuals alike, contributing to the unique character of Nevada's economy and its long-standing reputation as a low-tax state.
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Poll tax
The Nevada Constitution, in Article 10, Section 8, previously required the payment of an annual poll tax from male residents between the ages of 21 and 60 years old, excluding uncivilized American Indians. This poll tax was to be used for the maintenance and betterment of public roads and was repealed in 1966.
In addition, the Nevada Constitution, in Article 4, Section 14, previously addressed the right of suffrage for individuals in military or naval service of the United States. It stipulated that their votes should apply to the county and township of which they were bona fide residents before their entry into such service. Importantly, it also prohibited the requirement of paying a poll tax as a condition for the right to vote. This section was amended in 1956 and repealed in 1972.
On a federal level, the Twenty-fourth Amendment to the United States Constitution, ratified in 1964, abolished poll taxes in federal elections. This amendment ensured that the right of citizens to vote in any election for President, Vice President, or members of Congress would not be denied or abridged due to the failure to pay poll taxes or other taxes. The amendment granted Congress the power to enforce this article through appropriate legislation.
The Twenty-fourth Amendment was a significant step in the pursuit of civil rights during the tumultuous 1960s, coinciding with the Civil Rights Act of 1964 and the Voting Rights Act of 1965. Despite the amendment, several states continued to impose poll taxes until the Supreme Court's decision in Harper v. Virginia Board of Elections (1966), which ruled that poll taxes in all elections were unconstitutional.
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Tax on interstate commerce
Article 10 of the Nevada Constitution, entitled "Taxation", includes a section that addresses the taxation of interstate commerce. This section states that personal property moving in interstate commerce through or over the territory of Nevada is exempt from taxation. Specifically, it mentions that such property should not be taxed if it is consigned to a warehouse within the state for storage before reaching its final destination outside Nevada. The constitution also provides exemptions for certain financial instruments, such as shares of stock, bonds, and bank deposits, which are deemed to have already been taxed on the underlying property.
The Nevada Constitution has been amended multiple times, with changes to Article 10 occurring in 1902, 1906, 1942, 1960, 1962, 1974, 1978, 1982, 1986, 1989, 1990, and 2002. One notable amendment, the Medical Equipment Sales Tax Exemption in 2018, added an exemption for sales taxes on medical equipment.
In recent years, Nevada has implemented a Commerce Tax, which is a tax on the gross receipts of businesses with revenues exceeding $4 million in the state. This tax is part of the Nevada Revenue Plan, which also includes increases in corporate annual business fees, payroll taxes, and cigarette taxes. The Commerce Tax has been the subject of debate among public finance scholars due to its potential for tax pyramiding and distortion of business decision-making.
The Commerce Tax in Nevada is due annually on August 14, unless that date falls on a weekend or holiday, in which case the next business day is the due date. The tax year for the Commerce Tax runs from July 1 to June 30, and initial tax reports are due on the 45th day following the end of the tax year. Businesses have the option to e-file their Commerce Tax returns using the Nevada Tax Center or mail them to the Nevada Department of Taxation.
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Tax on imports and exports
In the case of Crandall v. State of Nevada (1867), the Supreme Court of Nevada ruled that a special tax imposed on railroad and stage companies for every passenger carried out of the state was, in fact, a tax on passengers for the privilege of passing through the state. The court clarified that such a tax was not a simple tax on the business of the transportation companies.
The court further asserted that this type of tax imposed by a state does not conflict with the provision of the federal Constitution, which prohibits states from laying duties on exports. This decision was based on the understanding that the power granted to Congress to regulate commerce with foreign nations and among the states encompasses subjects of a national character, falling exclusively within congressional control.
The case of McCulloch v. Maryland is cited as a leading example of the court's stance on state taxing power. In this case, the Congress had chartered the Bank of the United States, authorising it to establish branches in different states and issue circulating notes. The state of Maryland levied a tax on these notes, which the bank refused to pay, challenging the tax as unconstitutional.
The Crandall v. State of Nevada case also considered the status of a citizen of the United States travelling from one part of the Union to another as an "export." The court referenced The Passenger Cases, which determined that foreigners coming to the country were considered "imports" within the meaning of the Constitution.
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Tax on certain property
The Nevada Constitution prohibits the taxation of certain properties. This includes personal property that is moving in interstate commerce through or over the state of Nevada. This also includes property consigned to a warehouse in Nevada for storage before reaching its final destination outside the state. Such property does not acquire a situs in Nevada for taxation purposes and is thus exempt from taxation.
The Nevada Constitution also prohibits the taxation of lands or property belonging to the United States. This includes lands belonging to citizens of the United States residing outside of Nevada, which shall never be taxed higher than the land belonging to residents of the state.
Furthermore, the Nevada Constitution deems shares of stock, bonds, mortgages, notes, bank deposits, book accounts, credits, securities, and choses in action of like character as exempt from taxation. These are considered to represent interests in property that have already been assessed and taxed, either within Nevada or elsewhere.
The Nevada Constitution also addresses agricultural and open-space real property. The legislature may constitute these properties as a separate class for taxation purposes and provide a separate uniform plan for appraisal and valuation for assessment. If such a plan is implemented, the legislature must also provide for retroactive assessment when agricultural or open-space real property is converted to a higher use.
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Frequently asked questions
Inheritance and income taxes are prohibited by the Nevada Constitution.
Article 10 of the Nevada Constitution is entitled "Taxation" and consists of seven sections.
Article 10, Section 1 of the Nevada Constitution states that there must be a uniform and equal rate of assessment and taxation, with exceptions and exemptions.
Yes, the Nevada Constitution also mentions a poll tax, which was repealed in 1972.
The Nevada Constitution prohibits certain taxes, such as inheritance and income taxes, and ensures a uniform and equal rate of taxation with some exemptions. It also protects the freedom of religious worship and prohibits slavery.
