A legislative hearing on a proposal to get rid of the state income tax lasted for hours at the state Capitol in Lincoln.
The Legislature’s Revenue Committee is weighing the pros and cans of LB 405, a proposal to eliminate the state individual and corporate income tax in exchange for the elimination of $2.4 billion in sales tax exemptions.
Sen. Beau McCoy of Omaha, a co-sponsor of the legislation, told Revenue Committee members all those behind the push to eliminate the state income tax are flexible on how to pay for it.
“I don’t think you go into a bill like this, a discussion like this, a topic like this and believe that you have all the answers,” McCoy stated.
Sales tax exemptions granted by Nebraska total approximately $5 billion annually. The state income tax, both individual and corporate, generates around $2.4 billion a year.
The other co-sponsor of the measure, Sen. Brad Ashford of Omaha, asserted that the legislature has created an unbalanced tax code by approving a number of sales tax exemptions over the years on an ad hoc basis.
“When you have $5 billion worth of exemptions and $1.8 billion worth of taxable sales, that’s out of whack,” according to Ashford. “That’s why property taxes are too high and that’s why income taxes are too high.”
Ashford says that this is not a new issue. He says tax reform was an issue when he first ran for the legislature in 1986.
AUDIO: Sen. Beau McCoy opens testimony before the Revenue Committee. [8 min.]
AUDIO: Sen. Brad Ashford opens testimoney before the Revenue Committee. [11 min.]