As Nebraskans recover from the most devastating natural disaster in our state’s history, the Legislature continues to work on the next two-year budget and property tax relief. While senators work, it’s important that they approach these issues in a way that brings people together and provides tax relief for all Nebraskans.
This year, I have three property tax relief proposals. My budget provides $51 million in new, direct property tax relief through the Property Tax Credit Relief Fund. This is a 23% increase in property tax relief from this fund to all Nebraska property owners. This approach puts more money directly into the pockets of working families. Second, I am recommending we establish a statutory floor of $275 million for the Property Tax Credit Relief Fund. Third, I proposed a 3%cap on property tax increases by local governments.
Sadly, some state senators are talking about raising taxes on Nebraskans in the name of property tax relief. A number of the so-called “tax relief” proposals simply shift the tax burden from one tax to another, taking money from one group of Nebraskans and giving it to another.
This is wrong for at least three reasons. First, it is fundamentally unfair because it creates winners and losers instead of providing tax relief for everyone. Second, these plans avoid the hard work of controlling government spending, which led to this high tax problem. Third, this method has already been tried and it failed to deliver tax relief. In 1991, LB 1059 was implemented. This created the school aid formula known as the Tax Equity and Educational Opportunities Support Act (TEEOSA) in the name of property tax relief. With this bill, the Legislature raised the sales and income tax. This ultimately did not reduce property taxes, and by 1994 we again had record high property taxes from schools.
As senators work on tax policy, you will sometimes hear them talk about “raising revenue” to make changes to our tax laws. This is politician code for raising your taxes, and I will oppose such efforts. Here are three of the top tax increases under discussion in the Legislature:
» Increasing the sales tax rate.
In Nebraska, the sales tax has gradually crept higher over the past 50 years — from 2.5% in 1967 to 5.5% today. If the Legislature raises the sales tax yet again, we will end up with a high sales tax and high property taxes at the end of the day. As we rebuild Nebraska, we should lower the sales tax, not raise it, to spur economic growth. The most recent tax burden study by the Department of Revenue says a $100 million reduction in the sales tax will increase personal disposable income by $176 million and create 1,904 jobs.
» Taxing bottled water, candy, pop and grocery items.
Right now, most of our food and drink we buy at the grocery store isn’t taxed. If some senators get their way, that could change. Robin Hood took from people to give to the needy, but taxing grocery bills is the opposite. This approach is “Reverse Robin Hood,” taking money from Nebraskans who least can afford it to give it to others. Food taxes would fall heaviest on working families that are already pressed to make ends meet each month. Whereas the poorest 20% of households spend between 28.8% and 42.6% of their budgets on food, those households in the wealthiest 20% spend less than one-tenth of their budget on food.
» Eliminating sales tax exemptions for hair care, pet care, automotive repair, home repair and plumbing, among other services.
Nebraska’s tax code currently exempts many services from sales tax. Many of these services are basic necessities Nebraskans budget for regularly. When the barbers, builders, butchers and other small businesses experience a tax increase, they are forced to pass on the costs to the customers who need their basic services. At the end of the day, the money from these tax increases will come out of your family budget.
As the legislative session continues, I hope you will follow debate closely. While I will oppose attempts by senators to raise your taxes, I will work with senators who want to provide tax relief for all Nebraskans — rural or urban, farmer or homeowner, or rancher or retailer. If you want to weigh in on the tax discussion, I hope you will contact your senator. You can find their contact information at nebraskalegislature.gov. You are also welcome to contact me at email@example.com or call 402-471-2244.