LIBA Urges Reduction in Personal and Corporate Income Tax, Reduced Unfunded Mandates and Controlled Spending in Letter to Tax Modernization Committee

Senator Hadley and Members of the Tax Modernization Committee:

I write on behalf of the Lincoln Independent Business Association (LIBA) to share our opinions and recommendations on the State of Nebraska’s tax system and how it could be restructured to benefit Nebraskans.

LIBA and our 1,200 members feel four steps should be taken to make Nebraska’s tax system more equitable and balanced.  These steps include reducing the corporate income tax, reducing the personal income tax, ensuring full appropriations to fund state programs and a thorough examination of state spending.

  • Reduce the Corporate Income Tax. Nebraska’s corporate income tax is high relative to that of neighboring states, collects relatively little revenue, and disproportionately burdens small and established Nebraska Businesses.[i] Legislators recognized the impediment posed by a high corporate tax rate and created an extensive system of business tax incentives to compensate.  Though the intent is noble this remedy does not solve the problem.   Instead, Nebraska should lower its corporate income tax and correspondingly reduce business tax incentives allowing Nebraska to boast a lower corporate tax rate without raising revenues elsewhere.  This measure would increase Nebraska’s attractiveness as a place to do business and level the playing field between employers large and small.
  • Reduce the Personal Income Tax. The income tax discourages the creation of wealth and is among the taxes most destructive to growth.[ii] A reduction in the individual income tax will relieve the tax burden on individuals and sole proprietors freeing them to use their money to create value in Nebraska’s economy and jobs for Nebraska citizens.  Any reduction in the income tax rate will be partially offset by an increase in income and sales tax revenues realized through individuals and businesses relocating to or remaining in Nebraska due to our tax climate. Further offset could be achieved by attaching sunset provisions to sales tax exemptions and/or use of funds from the cash reserve.
  • Eliminate Unfunded Mandates. State law dictates many functions of county government yet the state does not pay for the counties to carry them out.  Notably this is done through a statutory mechanism whereby the state promises to pay county expenses but only so long as the legislature appropriates funds. In tight budget cycles funds are not appropriated and the county is forced to pick up the tab generika cialis rezeptfrei. The result is Nebraska’s heavy reliance on property taxes.  State policy discouraging use of the such a statutory mechanism and requiring state programs be funded by state revenues will both increase transparency and help to relive the burden of property taxes.
  • Examine State Spending. LIBA appreciates this committee’s time and dedication to review of Nebraska’s tax system and feels that the state would benefit from a similar review of state spending. LIBA believes periodic review of expenditures is necessary to align spending and priorities. This objective would be best accomplished by both increasing the resources available to the State Auditor’s office and establishing a committee, similar to the tax modernization committee, to undertake a comprehensive study of state spending. Together these measures will ensure Nebraska taxes serve Nebraskans instead of burdening them.

LIBA believes that these four changes will improve tax equity, help balance Nebraska’s tax system and drive economic growth.   Thank you for your consideration of LIBA’s tax policy proposals.

Respectfully,

Coby Mach, President

On Behalf of the LIBA Board of Directors


[i] Joseph Henchman & Scott Drenkard; “Building on Success: A Guide to Fair, Simple, Pro-Growth Tax Reform for Nebraska; Published by the Platte Institute and the Tax Foundation; 2 Oct. 2013; p. 24

[ii] Joseph Henchman & Scott Drenkard; “Building on Success: A Guide to Fair, Simple, Pro-Growth Tax Reform for Nebraska; Published by the Platte Institute and the Tax Foundation; 2 Oct. 2013; p. 27

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