Nebraska’s new tax policy

State governor Jim Pillen proposed a new tax alteration plan. On Wednesday, March 27, a debate was held in the Nebraska state legislature regarding the massive tax bill to reduce taxes in certain areas/fields. According to State Senator Lou Ann Linehan, the debate would address two things: the local property taxes that rank among the top 10 highest in the country, and Nebraska’s historically low state support for K-12 education.”

According to Pillen, the plan is to increase sales tax on some food items and certain bills. Some of these items are soft drinks like sodas, candies, smoking products, lottery tickets, veterinarian medical bills, and more. The plan would increase the sales tax by one cent. This will come at the cost of reducing local property taxes by 30% with plans to reach 40%. The goal is to generate $730 million or more in revenue to use in various K-12 school districts across the state.

The new tax plan has received both praise and criticism from various figures. State Senator Lou Ann Linehan said that this new tax reform is a “fundamental shift in how Nebraska funds education and in the state’s tax system.” She also considered that this change would significantly boost Nebraska’s national ranking to the middle range regarding support for state schooling. This would be a huge jump from its previous national ranking of 49th, being second to last.

The proposed shift from property tax to sales tax has garnered criticism from individuals such as Jim Vokal, CEO of the Platte Institute. According to Vokal, “Raising the sales tax rate and taxing business inputs, like advertising, is bad tax policy,” he continued by also saying, “We believe that constraining state and local revenue and spending growth is the best path forward rather than raising new sales tax revenues to lower property tax revenues.” Vokal believes that the changes would hurt the state’s economy despite the desired outcome, as it would put more burden on businesses and consumers.

Lincoln Sen. Jane Raybould argues that the bill should be pushed back a year to allow the property tax relief law, which was recently passed last year, to take its full effect. This was further backed by fellow Lincoln Sen. George Dungan, who suggested that more time is needed to consider the new policy since it will be a “massive” change in tax policy.

By Robert Tengker