Tax Raising Bills

Last Thursday Gov. Jim Pillen delivered his State of the State address to the Unicameral Legislature. The primary focus of the speech was devoted to tax relief, especially property tax relief. So, I listened closely to hear his plans for tax relief. Although he vows to reduce property taxes by 40 percent, he never offered any kind of substantive plan for doing so. Gov. Pillen's plan continues several of the same stale practices which have never worked in the past, such as creating more property tax credits for businesses and transferring more revenues into the state's property tax cash-credit fund. Gov. Pillen is even pinning his hopes for income tax relief on a 3.9 percent income tax rate...coming in the year 2027! The Governor's tax plan amounts to nothing more than slight of hand tactics to fool the public into believing that meaningful and significant tax relief is on its way.

January 17 was the last day for State Senators to introduce new bills. Sadly, none of the new bills offer meaningful and significant tax relief for Nebraskans. The best legislative proposal was offered by Sen. Brad von Gillern of Elkhorn. His bill, LB 1241, would require political subdivisions to reduce their property tax levies by the same percentage of increase in property valuations. The result would be no increases in property taxes, but no reduction in property taxes, either.

Sen. Lou Anne Linehan also of Elkhorn is chair of the Legislature's revenue committee. Sen. Linehan introduced LB 1315, a bill for an increase in the state sales tax rate. Sen. Linehan's legislative plan is to raise the state sales tax from 5.5 percent to 6.5 percent with 2.75 percent of the revenues being earmarked for Nebraska's Good Life districts. Her hope is that by appropriating some $500 million to economic development efforts, we can eventually reduce property taxes.

Several new bills were introduced to raise more sales tax revenues for the State. Several State Senators introduced bills to eliminate various sales tax exemptions. Sen. Fred Meyer of St. Paul introduced LB 1311, which would remove the sales tax exemption for pet, storage, and moving services. Sen. Linehan introduced LB 1319 to eliminate the sales tax exemption for data centers. Sen. Von Gillern introduced LB 1308 to repeal the sales tax exemption for accounting services and ag services, and Sen. Justin Wayne of Omaha introduced LB 1345 to remove the sales tax exemption for legal services. What each of these bills have in common is generating more sales tax revenue for the State.

What all of these new tax plans have in common is that none of them cut taxes. The fact of the matter is that the Governor, the chair of the Legislature's revenue committee, and the other members of the Unicameral Legislature have no viable plans to reduce the overall tax burden of Nebraskans this year. All that has been offered up this year amounts to nothing more than smoke and mirrors. Much like the Wizard of Oz, those behind the curtain are unable to solve Nebraska's tax problems. Nebraska's tax system is broken, it cannot be repaired, and all of the new legislation proposed this year only further verifies this fact.

To further show how broken our tax system is, consider Sen. Linehan's bill LB 1317. The entire text of LB 1317 states succinctly that: "1) Property taxes are too high; and 2) Legislative changes to lower property taxes are needed and desired." That's it! LB 1317 is known as a shell bill. Sen. Linehan introduced the bill in this way so that she can hopefully amend it mid-session with some kind of meaningful property tax relief plan. However, if she already knew how to reduce property taxes, she would not need a shell bill to amend later in the session.

I share these things today to show readers how broken our tax system really is and how the Governor and the Unicameral Legislature are unable to fix it. The EPIC Option Consumption Tax bill that I introduced last year with my personal priority designation, continues to be ignored and continues to be the only viable option for meaningful and significant tax relief. The EPIC Option Consumption Tax is the only option currently on the table with a workable model and endorsements by some of our nation's leading economists, such as Art Laffer, Stephen Moore and Nebraska's own Ernie Goss.

Without the EPIC Option Consumption Tax, Nebraska will continue to flounder as one of our nation's worst tax states. According to the Tax Foundation Nebraska is the 38th worst tax state in America for its overall tax burden and is the 40th worst state for property taxes. We are worse than all of our surrounding states, but the EPIC Option Consumption Tax would propel us to the front of the line and make us the most tax friendly state in America. When I ran for office eight years ago, I vowed to offer Nebraskans meaningful and significant tax relief, especially property tax relief. The EPIC Option Consumption Tax remains the best legislative option for accomplishing that goal. Please visit our website at http://www.epicoption.org.