“Nevada’s gift to its citizens on the 75th anniversary of her admission to the Union … was a 20 percent reduction in its state tax rate. It is the boast of the citizens of the Silver State that they are not troubled with a sales tax, a state income tax, a gift tax, an inheritance tax or a tax on intangibles.”

Thus brags the May-June 1939 issue of “Nevada Highways and Parks,” the grandmother of today’s “Nevada” magazine. That the 1939 Legislature cut taxes, in the Great Depression no less, is astounding.

Recently, Gov. Jim Gibbons was roundly criticized for vetoing a gas tax hike. Three thousand jobs would have been lost, so the argument went, if the Legislature would have failed to override the veto.

This is a basic fallacy, a falsehood so frequently repeated it passes for a truism today. Government taxation, justified or not, does not “create” jobs.

If the people are taxed to the tune of providing enough money for 3,000 jobs, it simply means a transfer has occurred; in effect, the equivalent of 3,000 jobs were lost or not created in the private sector. Public works = taxes = reduced private spending = net loss of private jobs. At best, tax-created jobs are equal to the same number of jobs that would have been made if the money remained in private hands. At worst, since public monies must pass through the sieve of bureaucracy, the tax money spent can actually generate significantly less growth than could have been achieved had the money remained in private hands.

Tax policies can cause huge economic shifts. For my business I recently needed to purchase about $25,000 worth of machinery. Nevada’s sales tax became an issue. A colleague suggested I go to Oregon, which has no sales tax. With the Nevada sales tax I will pay about $2,000 by buying here. Thus, tax policy, especially as the sales tax rate creeps ever upward, can harm local merchants.

Nevada’s warehousing industry was born thanks to wise tax policy. Most states, including California, tax inventory and in-transit goods. Nevada passed a “freeport” law in 1954, outlawing these same taxes.

But, before investing tens of millions in giant warehouses, the industry wanted a more solid assurance. What if the Legislature suddenly changed its mind? It’s tough to pack up buildings and move away.

So Nevadans went to the polls and in 1968 put the prohibition in the state constitution. Consequently, a boom in warehousing and warehousing construction followed.

No one likes taxes, but they are inevitable and some are more onerous than others. Direct taxes, such as gas taxes, are spent improving roads. The most offensive taxes are those taken from one section and spent in another. For example, for every dollar Nevadans pay in federal taxes, less than 75 cents are returned here. In spite of Senate majority leader Harry Reid’s supposed power, Nevada is second lowest in per capita federal spending, with an average of $6,638. The national average is $9,184. Many states receive much more than they pay in.

Taxes often have certain built-in checks and balances. A high tax rate on paper should produce more, but when rates get excessive people stop producing. Thus, a 40 percent income tax rate can actually generate less government revenue than a 25 percent rate.

As a nation we have become accustomed to expecting “free” government service for a variety of things (e.g., the recent push for “free” healthcare).

While we are encouraged in this way of thinking by politicians, the fact is this is a delusion, smoke and mirrors. If we want government services, expect higher taxes. The reason the 1939 Legislature could cut taxes is at least partially due to the people having much lower expectations from government. If we want lower taxes, we must also be willing to accept more individual responsibility. There is no free lunch.

Ira Hansen is a lifelong resident of Sparks and owner of Ira Hansen and Sons Plumbing.