Tax Idea Would Cut Rural Nebraska Deepest

Recently, Governor Heineman was asked about the possibility of eliminating the state income tax. He responded, “Every option I can think of is on the table now.”
Nebraska would be wise to forget this idea, which could inflict serious economic damage by shrinking state revenues by 56 percent and making education, public safety, health care and other basic services nearly impossible to fund effectively.

Such a radical plan would strain middle and low-income family budgets and place greater burdens on regressive sales and property taxes, particularly in rural Nebraska, where property taxes are higher and rural communities are more dependent on them to fund basic services. Eliminating the income tax will mean higher property taxes for farmers, ranchers and other rural residents.

Moreover, it would increase the cost of groceries and other necessities if sales tax exemptions are lifted to replace income tax revenues, worsening families’ struggles to afford food and other basics.

Ending the income tax is not the path to prosperity. Nebraska has lower unemployment than all nine states with no income tax, and stronger per capita personal income growth over the last decade than six of them. Healthy and educated workers, public safety, and infrastructure, which require investments made possible by the income tax, are far more important to economic development.

Oklahoma defeated a similar measure this year but Kansas did not, and is now facing a $2.5 billion budget deficit. This is a bad idea for Nebraska and should be taken off the table.

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