Governor: End Nebraska's income, corporate taxes

Neb. gov seeks to close individual, corporate income taxes; backs limiting business tax breaks

Associated Press

LINCOLN, Neb. (AP) -- Gov. Dave Heineman called Tuesday for ridding Nebraska of its individual and corporate income taxes and making up the difference by ending as much as $2.4 billion in sales tax breaks for businesses, and all goods and services — except for food — are on the table.

The Republican governor unveiled his tax overhaul plan and budget proposal in his annual State of the State address to lawmakers.

"Are we going to be satisfied with a mediocre tax system that won't create the jobs of the future for our sons and daughters?" Heineman asked. "Or, are we willing to consider reforming the tax code so that we have a modern, simpler and fairer tax code? Are we willing to consider a bold, innovative and strategic tax reform plan that would create a top ten business climate in Nebraska?"

Heineman said he would introduce "alternative options" for lawmakers in the next few days that would cut many sales tax exemptions for businesses. But he avoided specifics, except to say he wouldn't support taxing food.

In a news conference immediately after the address, Heineman said all other exemptions were on the table, including breaks for manufacturing and agribusiness, two of the state's largest industries.

Nebraska exempts $5 billion in purchases a year, more than it collects. In fiscal year 2014, Nebraska is projected to bring in $1.5 billion in sales and use taxes.

The plan would require lawmakers to eliminate as much as $2.4 billion in sales tax breaks for businesses, many of whom will likely fight to protect their particular exemption. However, Heineman said he has approached Nebraska business leaders in recent months to see if they were willing to trade their sales tax exemptions for lower corporate and individual taxes.

The governor said he has spoken with farmers and ranchers who are willing to talk about the trade-off.

"You may be surprised, but many are willing to have that discussion," Heineman said. "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."

Heineman said he could agree to a plan that would lower income tax rates instead of eliminating the tax altogether. The governor's proposal would also exempt military retirement pay and Social Security income from state income taxes. Lawmakers have signaled an interest in eliminating both taxes this year, with several bills already introduced.

State Sen. Brad Ashford of Omaha, who is running for mayor there, said the governor's proposal could produce a cash windfall for Nebraska cities. Cities are allowed to impose a sales tax of up to 1.5 percent, and ending exemptions for certain goods and services would allow them to collect more.

"Cities get a windfall, so from that standpoint it's good," Ashford said. "The cities will benefit dramatically."

Heineman also unveiled his proposal for a new, two-year budget that sets the stage for a showdown with lawmakers on several issues. The plan includes no money to expand Medicaid coverage, an optional part of the federal health care law. Some lawmakers in the officially nonpartisan Legislature are expected to push for expanded coverage as a way to lower health care costs, and Heineman has promised to oppose them.

Heineman's budget also attempts to de-fund prenatal care services for illegal immigrants and other low-income women. Lawmakers overrode the governor's veto of the bill last year and approved $786,000 per year for coverage, despite his strong objections.

Heineman's proposal also calls for an additional $62.1 million to the University of Nebraska and a $6.2 million increase to the Nebraska State College System, which has three schools. In exchange for the extra money, the schools have agreed to freeze tuition for two years. Heineman said he has offered a $10.7 million increase in funding to Nebraska's community colleges if they agree to a similar freeze.

Ashford said he supported the increased investment in state funding for universities, but he still plans to push for an overhaul of the state's juvenile services, which would also require a state investment.

Heineman proposed a $130 million annual increase in state aid to schools through the state's funding formula, which distributes money based on student enrollment and land values. Rural schools with declining student numbers and soaring farmland values likely won't see as much aid as larger urban districts. Heineman's budget would also deliver nearly $30 million in aid for special education, which is shared more evenly.

View Comments (46)

Recommended for You

  • Luggage piece found on French island near possible MH370 debris

    Part of a bag was found Thursday on the French Indian Ocean island of La Reunion not far from plane debris which has fuelled speculation it may be from missing flight MH370. "The piece of luggage was here since yesterday but nobody really paid attention," said Johnny Begue, a member of a local…

  • Chicago man cleared after 17 years in prison shot dead

    CHICAGO (AP) — A Chicago man who served 17 years in prison for murder before being cleared of the crime has been shot and killed almost three years after being released from prison, police said Wednesday.

    Associated Press
  • Family Pet-Sitter Helps Herself To Homeowner's Possessions

    DEAR ABBY: A trusted and beloved family member who takes care of my cats -- and therefore has a key to my house -- has been stealing things like cleaning supplies, knickknacks, family pictures, etc. Most of them have little monetary value. But imagine my surprise when I spotted some of my missing…

    Dear Abby
  • An American Dentist Killed Zimbabwe’s Famous Lion

    Cecil the lion, a famous black-maned resident of Zimbabwe’s Hwange National Park, died at the hands of an American dentist, conservationists claim. “Mr. Palmer shot Cecil with a bow and arrow but this shot didn't kill him,” Johnny Rodrigues, chairman of the Zimbabwe Conservation Task Force, said in…
  • Play

    Body cam footage from Cincinnati shooting contradicts official story

    A University of Cincinnati police officer has been indicted for murder after body camera footage contradicted his official story outlining the events that led to the shooting death of unarmed Cincinnati driver Samuel Dubose.

    Reuters Videos
  • Hidden Security Cameras Are Shocking Surprise For Daughter

    DEAR ABBY: I'm a 19-year-old woman in college who still lives with my parents. I found out something several weeks ago that's bothering me, and I need advice badly. Years ago, after a robbery, my parents installed security cameras outside our house. I knew about them because they were visible. But…

    Dear Abby
  • Taliban disavows Afghan peace talks after leader declared dead

    By Kay Johnson KABUL (Reuters) - The Taliban's official spokesman disavowed peace talks with the Afghan government on Thursday, throwing fledgling efforts to negotiate an end to 14 years of war into disarray. The statement came a day after the Afghan government said that Mullah Omar, the elusive…

  • Dashcam catches off-duty cop threatening to put 'hole in head' of driver

    Technically Incorrect: A Massachusetts driver makes a wrong turn. What happens next, all filmed on his dashcam, has led to an investigation. And yes, it's now on YouTube.

  • Colorado theater shooter's dad saw wide-eyed smirk before

    CENTENNIAL, Colo. (AP) — James Holmes came home on winter break from graduate school looking haggard and making odd facial expressions, but his father didn't suspect at the time that he was descending into mental illness.

    Associated Press
  • Trump leads Republicans, but Democrats thump him: poll

    Bombastic US billionaire Donald Trump handily leads all fellow Republicans in the 2016 presidential race, though Hillary Clinton and other Democrats trump him in head-to-head matchups, a poll said Thursday. Trump plunged into the crowded Republican nomination battle last month, and has since…

  • Teens' 6 days adrift verge on limits for survival at sea

    TEQUESTA, Fla. (AP) — Crews pushed the limits of an ever-expanding search zone Wednesday for two teens missing at sea and potentially nearing the boundaries of human survival.

    Associated Press
  • Killer deal: Amazon will pay you $10 to buy a $30 Google Chromecast

    Google’s little Chromecast dongle is pretty awesome. The device plugs into the HDMI port on any HDTV or monitor and instantly gives users access to movies, TV shows, videos, music, photos and more that can be streamed from any Android device. Best of all, perhaps, the Chromecast is wonderfully…

    BGR News
  • Play

    Custom truck built by father and son stolen in Lemoore

    A Lemoore man is on the hunt for his stolen pick-up truck. The classic custom ride holds significant sentiment to its owner, who built the truck with his late father.

    KFSN – Fresno
  • Independent media battle on in Putin's Russia

    By Timothy Heritage MOSCOW (Reuters) - Alexei Venediktov, one of Russia's most prominent journalists, does not go out without a bodyguard and does not answer mobile phone calls for fear of being tracked. Such precautions do not seem out of place in a country where at least 17 journalists have been…

  • Internet mauls dentist accused of illegal kill of popular lion

    Technically Incorrect: Walter Palmer, a dentist in Minnesota, has his Yelp entry attacked by those not fond of his allegedly illegal killing of Cecil the lion in Zimbabwe.

  • Kurdish rebels attack Turkish security forces, killing 5

    ANKARA, Turkey (AP) — Kurdish rebels have attacked Turkish security forces in two separate assaults in southeast Turkey, killing five people, officials said. One rebel was also killed.

    Associated Press
  • Boko Haram 'slits throats of 10 fishermen' near Lake Chad

    Boko Haram Islamists slit the throats of 10 fishermen in villages near Baga on the shores of the Lake Chad in northeastern Nigeria, a leading fisherman and a resident said Thursday. "On Monday around 4 pm (1500 GMT), Boko Haram attacked three villages on the shores of Lake Chad where they…