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J.L. Schmidt

Capitol View

Nebraska Press Association

Tax panel needs courage to propose change

Thursday, July 18, 2013

The Scarecrow told the Wizard of Oz he wanted courage.

The chairman of the Nebraska Tax Modernization Committee says he hopes his legislative colleagues will ask for the same thing when they look at recommendations from the committee later this year.

Sen. Galen Hadley of Kearney, chair of the Legislature's Revenue Committee, is also heading the tax study, which was created by Legislative Resolution 155 introduced by the Unicameral's senior-most member, Ernie Chambers of Omaha. Hadley has called on the committee and the full Legislature to be courageous in finding solutions to the taxing issue.

Hadley said he wants everything on the table and remains hopeful that neither the governor nor the individual committee members will take things personally. Gov. Dave Heineman started the ball rolling in January when he asked lawmakers to consider two proposals to do away with the state personal and corporate income taxes and replace any lost revenue by removing exemptions on specific areas of sales tax.

Lengthy public hearings on the measures and an outcry from a number of special interest groups, fearing their oxen would be gored, caused the Revenue Committee to retreat; Chambers to threaten to bring the Legislature to its collective knees if either bill made it out of committee; the governor to drop the issue and suggest a study.

The 15-member committee is studying a tax code that was first written in 1967. Consider how many things have changed in 46 years. There have been numerous studies in that interim, but no real substantive action save for 1992 when the Nebraska Supreme Court sent the Legislature back into special session three times to deal with tax matters.

A state think tank, OpenSky Policy Institute, has released a summary of the state tax system that concludes Nebraska is neither a high-tax nor low-tax state. The individual income tax, sales and use taxes, gas and fuel taxes, corporate income taxes and $214 million in assorted taxes including excise tax on alcohol, tobacco and keno, all go to support state government. Taxes also support local political subdivisions (schools, cities and counties). Property taxes, local option sales taxes and inheritance taxes are also collected.

OpenSky has provided a list of what is and what isn't taxed and in what sector. Everything, as Hadley had hoped, appears to be on the table. When the recommendations come forth and are presented early next year to lawmakers, let's hope that senators remember the Scarecrow and only need courage. It would be quite different if they were like the Tin Man who needed a brain.

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