This ongoing recession has been particularly pervasive. It doesn’t seem there is any part of the community that has escaped unscathed. The working class is seeing jobs disappear. Housing prices have plummeted—whether they have bottomed out remains to be seen—and many people are upside down in their homes. Bankruptcy protection is appealing to more and more people these days.

Even the casino operators, once thought impervious to economic downturns, are feeling the pinch. And it’s not just small companies, it’s the heavyweights. Companies like MGM Mirage and Harrah’s Entertainment. Companies that, just two or three years ago, were expected to revolutionize the Strip by consolidating their massive landholdings into metaresorts that would change the face of the casino industry. Well, that idea seems to be off the table. It’s not even clear yet just what the Strip will look like next year. (You can read more about that in the story “The State of the Strip” by Caitlin McGarry on page 28.)

And now to address a state budget shortfall, the wise men and women in Carson City are looking to up the sales tax by 0.35 percent. It’s not a huge increase, although my understanding is that it will take the total sales tax rate in Clark County from 7.75 percent to 8.05 percent.

But what other options did the lawmakers have than to raise one of the rates of a nice regressive tax like sales tax? We all know that gaming is a popular target for tax increases, but this industry already pays more than its fair share, generating somewhere around half of the state’s general fund. An income tax is out of the question. So too, it seems, is a more broad-based business tax.

But there is an untapped industry in Nevada that is doing quite well for itself, and yet lags behind when it comes to taxes. It’s the state’s reason d’etre: mining. The Silver State is a leading producer of gold in the world. Nevada alone ranks fourth behind China, South Africa and Australia in production. And with the unstable global economy, the price of gold continues to climb.

Generous tax laws allow a number of write-offs for the mining industry. In essence, these companies are able to write off the cost of doing business. As a result, the Las Vegas Sun reported that despite the $5.4 billion in gross profits the industry enjoyed in 2007, it reported only $1.5 billion in net proceeds and paid just $34 million in taxes. Between 2000 and 2007, the industry sold $25.5 billion worth of gold but paid just $125 million in taxes for an effective tax rate of about half a percent.

For comparison, in 2009, gaming in Nevada generated $47 million in taxes in January, $65 million in February and $74 million in March based on overall revenues of $908 million, $830 million and $918 million in those months, respectively. The first three months of 2009 saw Nevada casinos pay 67 percent more to the state in taxes—$186 million total—than the mining industry did in the seven years from 2000 to 2007; and that payment was based on a total revenue that was 90 percent below what the mining industry generated in gross profits (and it doesn’t take into account the additional state revenue generated through live entertainment taxes, hotel room taxes or sales taxes).

Fortunately, there is at least one group that sees the potential value in making the mining industry pay its share of taxes: the Progressive Leadership Alliance of Nevada. The organization is looking at the possibility of a ballot initiative to amend the state Constitution to bring the tax code relating to mining into the 21st century.

But the mining industry has loads of cash—obviously, because they’re not parting with very much when it comes to taxation—with which they hire lobbyists and which they can use to fund a massive “public awareness” campaign. It will be a long and uphill battle to get this industry to pay its fair share.

This is something that should be of great concern to anyone who is in any way associated with the gaming industry. As the economy recovers and lawmakers look to better protect themselves and the state from budget shortfalls in the future, they’re going to need to find revenue from somewhere. And the gaming industry is almost always at the top of this list. It’s an easy pitch for any politician because far too many people see casinos as doing little more than printing money. While we know that’s not the case, just looking at how much support the Nevada State Education Association generated for its proposal to up the gaming tax to 9.75 percent to fund teachers salaries should provide ample evidence just how easy of a target the casino industry really is.

For the next two years at least, every Nevada resident will instead help shoulder the burden of the state’s economic troubles through the increased sales tax. Maybe that lesson will be enough to help convince voters to support an initiative to apply a fair tax on the mining industry. For lawmakers looking to balance a budget or fill the coffers of a rainy day fund, this industry is the real gold mine.

By Greg Jones

Greg Jones is managing editor of Casino Connection Nevada, as well as associate editor of Global Gaming Business magazine.