FOR IMMEDIATE RELEASE
(Lincoln, Neb.) Photo Gallery - Gov. Dave Heineman delivered his State of the State address today focusing on the need for tax reform that will benefit working and retired Nebraskans, and growing the State’s economy by helping small businesses prosper. Gov. Heineman is calling for the elimination of the individual income tax and the corporate income tax.
“Today, we are operating in a technology-driven, global free market economy,” Gov. Heineman stated in his State of the State address. “Our current tax system needs to be modernized and transformed. It’s been nearly 5 decades since Nebraska had a serious debate about our overall tax system. Life has changed drastically since the 1960s, when we were operating in a completely different economic environment.”
“Nebraska has good schools, affordable homes, a strong work ethic and a low unemployment rate, but taxes are too high in Nebraska,” said Gov. Heineman. “High taxes impede economic growth. High taxes aren’t attractive for entrepreneurial growth and high paying jobs.”
Key points in the Governor’s tax reform proposal:
Twenty-three states exempt a portion of or all retired military pay, but Nebraska does not. Forty-three states exempt a portion of or all Social Security income, but Nebraska does not. Nebraska’s top personal income tax rate is 35th of 50 states; and is higher than all neighboring states.
Nebraska’s Tax Foundation Business Tax Climate Ranking is 31st out of the 50 states – a respected index that businesses rely on when choosing where to locate a business. Gov. Heineman added, “Being in the bottom half of all states is mediocre, at best.”
The State exempts more in sales taxes then it collects. Currently, the State exempts $5 billion in sales taxes annually, while only collecting $1.5 billion annually.
The Small Business and Entrepreneurship Council states in their 2012 U.S. Business Policy Index that “A high personal income tax rate raises the costs of working, saving, investing, and risk taking…the personal income tax influences businesses far more than generally assumed because more than 92 percent of businesses file taxes as individuals and therefore pay personal income taxes rather than corporate income taxes.”
“In recent months, I have asked business leaders if they would give up their sales tax exemptions if we could eliminate the individual income tax and the corporate income tax or at least lower the individual and corporate tax rates,” said Gov. Heineman. “They want simplicity and fairness. They want a modern tax code that rewards productivity, profits and job creation rather than having their lawyers and accountants spending time mining the tax code for exemptions. Our tax system shouldn’t favor one industry over another.”
During this Legislative Session, Gov. Dave Heineman will have legislation introduced to eliminate the individual income tax and the corporate income tax or at least lower these rates. The proposal will be budget neutral and revenue neutral by reducing some of the State’s current business sales tax exemptions. These exemptions have been enacted over the last fifty years, since the sales and income taxes we first introduced in Nebraska in the 1960s.