State legislators hear the pros and cons of tax reform this afternoon.
The Legislature’s Revenue Committee begins two days of hearings on bills that would either do away with the state income tax or reduce it by eliminating sales tax exemptions.
Gov. Dave Heineman will make a presentation before the committee meeting at the Capitol.
“I’m going to continue to talk about the need for tax reform, that we need a modern, simpler, fairer tax code if we’re going to create jobs of the future for our kids. That’s what this is all about,” Heineman tells Nebraska Radio Network. “Secondly, I want to thank Nebraskans for the input they’re already giving us. I appreciate if you are going to lose your exemption you’re going to be very, very concerned.”
This afternoon, beginning at 1:30pm, the committee will take testimony on LB 405 which would eliminate $2.4 billion in sales tax exemptions. That number is important. It is approximately the amount the state collects in individual and corporate income taxes. The governor proposes eliminating enough sales tax exemptions to offset the revenue generated by the state income tax. The state grants around $5 billion in sales tax exemptions annually.
The hearing will be held in Room 1524 at the state Capitol in Lincoln. An overflow room, Room 1023, has been reserved by the committee. Additionally, Nebraska Educational Television will broadcast the hearing live on NET 2.
The sponsor of the legislation, Sen. Beau McCoy of Omaha, will open the hearing. Gov. Heineman is scheduled to testify as well as Tax Commissioner Doug Ewald who will address technical questions on the bill.
Sen. Hadley has scheduled one hour for proponents of the bill. No individual time limits will be imposed. The chairman asks that testimony by concise and no repetitious. The committee will accept written testimony to be incorporated in the legislative record.
Opponents will likewise be given an hour to testify and a third hour has been set aside for neutral testimony, testimony from those offering analysis of the legislation without supporting or opposing it.
The committee plans to take a break after the three hours of testimony and then will resume the public hearing. Sen. Hadley says the committee plans to hear from all who wish to testify.
The Revenue Committee will hear testimony on LB406 tomorrow afternoon, beginning at the same time in the same room under the same rules. NET does not plan to broadcast the second hearing, but will stream it live via its website netnebraska.org.
Heineman says he hopes to hear more than just complaints about the proposals.
“OK, I know you don’t want to lose your exemption, but are you for current tax code that penalizes job creation in this state that taxes seniors’ Social Security income and military retirement income?” Heineman asks. “So, we also want to hear from people; are you willing to have some trade-offs to make a better tax system for the future?”
The governor has released a list of sales tax exemptions to eliminate, but says he’s open to having that list amended.
“The only thing that I would tell people, we need to eliminate about half of the exemptions in order to eliminate the individual income tax and corporate tax. You tell me which $2.4 billion you want to eliminate, I’ll work with you,” Heineman says. “The only one that I think we shouldn’t be taxing is food that’s sold in grocery stores.”
AUDIO: Gov. Dave Heineman discusses the tax hearings with Brent Martin. [1:40]