Governor: Eliminate the state income taxes

By: Cole Miller

It's almost tax time. Imagine if you didn't have to pay state income tax. To stay competitive, Governor Dave Heineman is proposing exactly that. 
It's a welcome round of applause for Heineman Tuesday. Where in front of local lawmakers, he gave his annual State of the State Address.

“This is a great state and it starts with our citizens,” Heineman said.

In this year's budget, Heineman plans to tackle education, making it more affordable and more accessible. He's also looking at how to prepare the state for the Affordable Health Care Act next year and Medicaid expansion. Heineman opposes it, calling it an “enormous financial impact.”

But it was his third and final piece of the budget that caught the attention of the Legislature: major tax reform.

“Without the individual income tax and corporate income tax, there would be no income tax on working Nebraskans,” Heineman said. “Social Security and military retirement income would no longer be taxed. There would be no tax on small business income.”

To achieve this, Heineman wants to eliminate more than 2 billion dollars in certain sales tax exemptions for businesses,. He says many companies are willing to have this conversation.

 Speaker Greg Adams expects a lot of debate within the revenue committee.
“Every one of those sales tax exemptions on the books has a constituency,” Adams said. “Their arguments will be compelling and the gloves will come off.”

While the whole thing may sound good, Senator Jeremy Nordquist says over the long run, other taxes will need to be increased to offset the difference. 
“If they add all of that up, I think ultimately the burden under this plan shifts from corporations and high-income earners to middle-class Nebraskans,” Nordquist said. “So, that's where I have great concern over the Governor's package.”
Heineman hopes his ideas on tax reform will make the state more competitive with Wyoming and South Dakota, neither of which have a state income tax.