By: Sabrina Ahmed
The debate rages on tonight on whether Nebraska should do away with the state income tax. Would it help or hurt the economy?
About every 50 years, major tax reform happens behind these walls. This session, the Governor says it's time.
LB-405 would eliminate state income tax for Nebraskans by eliminating many of the sales tax exemptions big businesses across the state get.
Members of the Nebraska Department of Veterans Affairs stood by the Governor in support, saying they want to keep veterans in Nebraska.
"A lot of our younger veterans now are going to other places to live because it's cheaper—you don't see as many young veterans coming back to Nebraska," Dave Beran said.
The Governor said this will make our state competitive with other states that are growing faster. He said 43 states exempt social security from taxation and 23 states exempt a portion of or all military retirement from taxation. Americans for Prosperity agree.
"States without an income tax, their economies grow faster, they create more jobs, people move into their state instead of move out, people invest in their states—we want Nebraska to be a magnet for new states and new jobs," Brad Stevens from Americans for Prosperity said.
They say there are a few changes they'd like to see in the bill, but overall, they agree. Others aren't on the same page. Senator Nordquist said in a statement that this will shift the tax burden to the middle class he said:
"It creates a 'sick tax' levied on prescription drugs and hospital stays, and it raises taxes on the cost of a college education. It's the wrong direction for our state and our economy."
Many of the state's largest business groups have also said the proposal would hurt their members.