Income Tax Debate Begins This Week in Legislature
Lincoln, NE - Governor Dave Heineman's tax makeover plan includes taxing products and services you don't get taxed on right now. It's the trade-off for eliminating personal and corporate income taxes.
Tuesday, Senators Brad Ashford and Beau McCoy will introduce two bills to change Nebraska's tax system. One bill eliminates more than two billion dollars in sales tax exemptions and eliminates the personal and corporate income taxes. The other eliminates fewer exemptions and reduces taxes for retirees.
In the State of the State address, Governor Heineman told the Legislature, Nebraska can attract new businesses and create jobs if the state eliminates incomes taxes.
Under the bills to be introduced this week, prescription drugs, pet grooming, hospital and dorm rooms and many other products could be taxed. Manufacturing companies would lose many exemptions; including water for manufacturing and irrigation, energy, molds and dies and agriculture machinery and chemicals.
"Nebraska exempts more than it collects, that's not fair to small business and working Nebraskans," said Governor Heineman.
Nebraska Farm Bureau President Steve Nelson said eliminating sales tax exemptions would increase the tax burden on farmers. He says current exemptions help many farmers stay in business and sales tax breaks would be more beneficial than eliminating the income tax.
A spokesman for the Nebraska Hospital Association says the group has not taken a position on the bills yet. Hospitals and clinics could lose more than $36 million in annual tax breaks for medical equipment.
The governor's plan keeps the current exemptions on food, gas, admission to school sporting events and many other products and services.