Last week, the Legislature held a public hearing on LR 300 CA. This is the constitutional amendment I introduced that would eliminate property taxes, income taxes, and inheritance taxes completely.
The revenue currently collected by these taxes would be replaced by a single-rate consumption tax placed on all services and new goods.
So, what’s the difference between a sales tax and a consumption tax? A sales tax is collected on retail goods at the point of sale. A sales tax is collected every time something sells. A consumption tax, on the other hand, is collected one time on the sale of services and new goods.
The consumption tax would be collected on all services and new goods, without any exemptions, including food.
To make sure that lower income people would be held harmless, the consumption tax would come with a pre-bate to offset the consumption taxes paid on basic necessities, such as food. Think of the pre-bate as extra money in your pocket each month. Each month the Nebraska Department of Revenue would deposit a pre-bate into the bank accounts of every Nebraskan. The pre-bate would cover every Nebraskan’s consumption taxes up to the poverty level for each kind of status: Single, married, or family. So, after the pre-bate a family of four that spent $64,000 per year would have an annual consumption tax rate of only 5.32%.
There was great support for the resolution in the hearing. There were folks who drove as far as 300 miles away to testify for five minutes. There were more than 20 testifiers in favor of the resolution and 50 letters written to the committee in support.
It was a very diverse group of supporters ranging from agricultural people, residential folks and business owners. They were from rural and urban Nebraska. The heavy tax burden placed on Nebraskans is not an urban vs. rural divide; instead, it is an equal opportunity offender.
One glaring observation from the public hearing was the obvious lack of support for the resolution by agricultural organizations, except the Independent Cattlemen of Nebraska (ICON).
ICON has been very supportive of property tax relief, but I cannot say this about the other agricultural organizations. One has to wonder if these agricultural organizations really want property tax relief or if they just like talking about it.
If you are a member of one of these agricultural organizations you may want to question their leadership and ask them why they are not supporting the greatest opportunity ever introduced in our state to relieve and solve our burdensome property tax, income tax, and inheritance tax problems.
I went to the Legislature with the idea of offering solutions to problems. And I believe that is exactly what I have done for the past three years. The folks in my district have shared with me that the tax burden is more than they can bear.
So in 2017 we started a ballot initiative for Constitutional Amendment for a 30% reduction in your property taxes.
The folks that were spearheading that petition drive withdrew that effort in May 2018 against my will. So, in 2019 I introduced another Legislative resolution to refund or credit property taxpayers 35% of their property taxes paid.
The accompanying petition drive to put that constitutional amendment on the November ballot is still alive and well.
One question that often comes up when visiting with folks about the 35% solution is: How are you going to pay for it? LR 300 CA answers the question, “how are you going to pay it?”
The petition drive is the hammer that is forcing the current discussion on property tax relief. So, we will need to continue signing and collecting signatures in order to force the legislature to make a decision.
The Legislature is more scared of the schools and the Chamber of Commerce and those who collect and spend the taxes than the voters who pay the taxes.
Steve Erdman represents Dist. 47 — west of Lincoln County — in the state legislature. His district includes the towns of Ogallala and Sidney.