Nebraska's economy has evolved – our tax code has not

While Nebraska’s economy remains reliant upon agriculture, the broader economy, following national trends, has moved away from a dependence on manufacturing and goods to knowledge and service. Nebraska’s tax code does not reflect that decades long trend.

The prior economic mix meant the state did not need to tax seldom-used service. Despite this shift, sales tax exemptions for services, such as dry cleaning and landscaping, remain in the state’s tax code. This array of exemptions has imbalanced the three legged tax stool, leaving it leaning heavily upon property taxes.

LB 1084, a proposed tax reform bill, seeks to bring greater balance to our tax system by drawing in revenues on services that residents are spending their dollars on. This reform provides Nebraska lawmakers an opportunity to modernize the state’s tax system. The added revenues will also allow for much needed property tax relief, while maintaining funding for services like education and public safety, which the state is obligated to provide.

By reinstating cuts made to the education funding formula and requiring a school funding study, the responsibility of paying for K-12 education begins to return to the state. Through the increase in revenues distributed to the property tax credit fund, Nebraskans will see the immediate property tax relief they have been calling for.

Rural Nebraskans are in need of property tax relief, but they are not asking to sidestep their responsibility to help fund the schools and services that uphold their communities. They are simply asking for balance in the way the state meets it obligations to pay for education. LB 1084 strikes the balance rural Nebraska is calling for, yet is it left to languish in the Revenue Committee without the opportunity to be debated on the floor. It is time for the Legislature to take up the debate of this legislation on the floor.

Feature photo: Landscapers work on the sidewalk and lawn of the Kearney County Courthouse in Minden, Nebraska, in July 2017. Currently, tax exemptions for services, such as landscaping, remain in the state's tax code. | Photo by Rhea Landholm