Not the Worst Idea In the Room

With a special session on Nevada's budgetary woes impending, there's growing interest in tax-based options for closing the state's projected budget gap. A new poll by the Las Vegas Review-Journal finds that one idea from the cherished tradition of "tax somebody" else scores pretty highly: increasing the sales tax on hotel rooms.

Is this going to be the best answer for permanently solving the state's school funding dilemma? It could be part of it. Hiking the rate from the current 10 percent to 13 percent is estimated to bring in at least $75 million a year, which is something.

The most obvious virtue of this plan is that most of the cost would fall on folks who don't live in Nevada. Tourists (and business visitors) will be the primary payers of this tax hike.

A secondary (and slightly more debatable) virtue is that these out-of-staters are probably not going to be dissuaded from visiting Nevada by a higher hotel tax. 13 percent is high, but not outlandish.

However. At a time when Americans are pinching pennies as much as possible, any tax hike that falls most heavily on low-income families could absolutely make Americans a little less likely to splurge on a trip to Vegas. And make no mistake about it-- a higher hotel tax will be felt most keenly by low- and middle-income travelers. High-rollers won't care, but the regular folks who are Vegas' bread and butter may very well factor this into their travel decisions.

One last consideration: as a new report from the Rockefeller Institute reminds us, Nevada now faces more and more competition from other states for gambling dollars. Anything that makes a Vegas trip more costly to, say, an Illinois farmer, makes them that more likely to just hit that state's riverboat gambling sites instead of traveling to Nevada.

So, it's not the worst idea in the room, and worse ones will almost certainly be discussed in next week's special session-- but it's not a cure-all either.