Governor Strikes Out with Tax Plan for Nebraska

We’ve been closely following tax proposals in Nebraska and have been especially concerned that both of Governor Heineman’s plans were of the tax swap variety – reductions in progressive taxes paid for by increases in regressive sales taxes.

This scathing op-ed in the Lincoln Journal-Star points to the tax impact of the Governor’s proposals as one strike against his policy prescription: “Strike one came with release of a study by the OpenSky Policy Institute that said 80 percent of wage earners in the state would pay more in taxes if the bill were implemented. Taxes would go up by an average of $631 a year under LB405 for people earning less than $21,000 a year. Taking the biggest hit were taxpayers earning between $37,000 to $59,999, who would pay an additional $722 a year. Taxes would go down by $4,851 for people earning more than $91,000 a year, the institute said.” CTJ’s partner organization, The Institute on Taxation and Economic Policy (ITEP), generated those numbers for OpenSky. The editors said the “second strike” against the governor’s plan was business groups’ opposition. (Evidently they want tax rates cut but don’t want to lose their own exemptions to pay for it.)

We learned this week that Nebraska tax policy debates don’t follow the rules of baseball, fortunately, and that two strikes were enough to send the Governor back to the dugout. Now he and legislators seem to be taking a more cautious approach and potentially forming a tax commission to better understand the state’s tax structure and get more expert input on modernizing it.