The Big Picture of Tax Reform
It probably won’t surprise you that I take keyboard in hand, again, to write about tax reform. At least once every year, for the past 17 years, I have written about either the need for comprehensive tax reform or some step in the right direction.
Most recently, the tax reform debate has focused on our need to renew the tax incentive legislation and the demand for lower property taxes. The legislature accomplished both of these last year, which gives us time to look at the big picture, again.
The good news is, during our work on incentives, Blueprint Nebraska was identifying a path forward. They worked across the state to design a plan aimed at a more prosperous future for all of Nebraska. When the plan was announced, it should have come as no surprise that comprehensive tax reform was at the top of the list.
You will soon begin to hear about a comprehensive tax reform plan being developed by Blueprint Nebraska. At the moment, while the research and analysis continue as necessary to create a plan, there are few details available. There are, however, some basic tenets that will be addressed in the eventual bill.
First, the State of Nebraska budget is funded chiefly through sales taxes, income taxes and fees. Local government, particularly schools, are primarily funded through property taxes and sales taxes. These four tax platforms will be where the conversation begins and ends.
What is important here is both the mix of taxes we depend upon to pay the bills at the state level; and, I think just as importantly, how competitive our rates are with other states vying for the same talent and businesses we are.
There is a widely held belief (and data to support it), that Nebraska’s income tax rates, property tax rates and many of our fees, (think mobile phone fees), are non-competitive.
At the same time, our sales tax rates are very competitive. Interestingly, we also are one of the most liberal users of sales tax exemptions in the country, reducing the amount of sales taxes actually collected by nearly two-thirds.
So, the question is whether there is a way to be more competitive with rates, more efficient and stable with generating the revenue needed to provide state and local services – and to do this in such a way that all of our citizens and businesses benefit.
This is the very work that is going on right now.
During the summer, the chambers of commerce across the state will be asking for your input on plans that will have emerged from the work of Blueprint Nebraska task forces.
When the plan is presented, it’s my hope that you will take a look and be eager to support this chance to move the state in a more competitive direction.
Hope all is going well with you and your business. Let me know if I can help in any way.
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