Heineman proposes an end to all corporate and income taxes in Nebraska

posted at 11:31 am on January 16, 2013 by Erika Johnsen

The metastasizing federal government may be in the process of doing anything and everything it can to stamp out the competitive virtues of federalism, but many states currently have Republican governors at the helm, even if they are conservatives of varying stripes — but state governments are going to be pretty much the only mitigating factor any of us can hope to have from the top-down economic wrath of a second Obama term. Even if we do have to deal with more mind-numbingly idiotic and intellectually deceitful proposals about how “asking the wealthy to pay a little more” will somehow accomplish anything in solving our national debt and spending problems, various states are looking for ways to innovate and make their own tax codes smarter, more efficient, and more pro-growth and more business-friendly.

Gov. Bobby Jindal in Louisiana recently proposed putting an end to all corporate and income taxes in his state, and Nebraska Gov. Dave Heineman is following suit:

Gov. Dave Heineman proposed an ambitious plan Tuesday to scrap Nebraska’s income and corporate taxes while eliminating as much as $2.4 billion in sales-tax breaks for businesses, with all industries except for food on the bargaining table. …

“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. And in a news conference immediately after the address, Heineman said all exemptions — minus food — were on the table, including breaks for manufacturing and agribusiness, two of the state’s largest industries.

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. Currently, the state 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.

States that do without having employing all three of the most common tax methods (income, sales, and corporate) tend to be more competitive, and the Nebraska code currently harbors a lot of exemptions for farmers, ranchers, and large agribusiness, some of the state’s biggest industries. Simplifying the tax code and breaking up the influence of large and organized special interests is something for which I won’t hold my breath out of the Obama administration, but at least certain states are brainstorming and doing what they can to improve their own economic outlooks.


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Well I’ll be darned! Our elected representatives from beautiful Nebraska are actually DOING something!

MelonCollie on January 16, 2013 at 11:36 AM

The divide between Red and Blue states gets bigger; the responsible versus the irresponsible.

Tater Salad on January 16, 2013 at 11:36 AM

They better stop this nonsense.

cozmo on January 16, 2013 at 11:36 AM

the most common tax methods (income, sales, and corporate)

Where does property tax fall in those three?

LoganSix on January 16, 2013 at 11:37 AM

Good on Nebraska. I hope it succeeds. I also hope VA manages to shed its gasoline tax.
Let the tide of conservative states roll.

freedomfirst on January 16, 2013 at 11:37 AM

Way to go, Governor. Invite the corporations fleeing California around for a visit.

mchristian on January 16, 2013 at 11:37 AM

My employer (Union Pacific Railroad) must be licking their chops in Omaha…

Khun Joe on January 16, 2013 at 11:39 AM

Red states, a warning: the op-ed calling for bailing out the blue states have been written. Hold firm, give no ground.

nobar on January 16, 2013 at 11:39 AM

Republicans in congress need to eliminate the federal deduction for state income taxes. Stop giving blue states a break for having high taxes – that just sending red state money to blue states.

GCM on January 16, 2013 at 11:39 AM

Well I’ll be darned! Our elected representatives from beautiful Nebraska are actually DOING something!

MelonCollie on January 16, 2013 at 11:36 AM

…Talking is not DOING yet!

Gov. Bobby Jindal in Louisiana recently proposed

Gov. Dave Heineman proposed

…always talk…no action!

KOOLAID2 on January 16, 2013 at 11:40 AM

Getting rid of corporate taxes is always a good idea. They contribute very little to State coffers and are there because economically illiterate ‘progressives’ believe corporations must be punished or something. Interestingly enough, when the tax does not exist, general job growth tends to rise dramatically. Corporations do not mind an excise tax or sales tax. It is mindlessly calculated and is immediately passed on to the consumer who indirectly voted for the same with full knowledge of the consequences, unlike the mysterious calculations that determine the Corporate tax due.

pat on January 16, 2013 at 11:42 AM

This is wonderful news that the states are doing their 10th to try to help their state and citizens! Unlike dc that wants to crater everything they get involved in?

Wonder if these states have/will try to get right to work past in their capital.
L

letget on January 16, 2013 at 11:44 AM

We need to actually advertise this when it inevitably succeeds in language the low-information voter can understand — and it needs to be as enticing as, “Hey, here’s some free stuff”.

A tall order, I know. But it can be done!

jdpaz on January 16, 2013 at 11:44 AM

The Republican Governors continue to impress me. Go ahead, and implement what you’ve proposed. Ground up is a good way for the GOP to go.

tommy71 on January 16, 2013 at 11:53 AM

Gov. Bobby Jindal in Louisiana recently proposed putting an end to all corporate and income taxes in his state, and Nebraska Gov. Dave Heineman is following suit:

Expect Kalifornia’s Jerry “Moonbeam” Brown to dive head first into the shallow end of an empty pool in 3…2…1…

SWalker on January 16, 2013 at 11:54 AM

jdpaz on January 16, 2013 at 11:44 AM

That’s all we need is low information voters from the blue states moving to the low tax red states and turning them into liberal cesspools.

Decoski on January 16, 2013 at 11:57 AM

Property taxes are the worse taxes. A person should be able to live free in a nation that promotes freedom.

astonerii on January 16, 2013 at 11:57 AM

Property taxes are the worse taxes. A person should be able to live free in a nation that promotes freedom.

astonerii on January 16, 2013 at 11:57 AM

Agreed, as a property tax effectively means that you do not own your property, but are leasing it from the state.

SWalker on January 16, 2013 at 12:00 PM

A Sales tax is the fairest way to collect revenue. It gets everybody — even the ones who pay no income or property taxes. The more you spend, the more you pay.

supersport667 on January 16, 2013 at 12:02 PM

Property taxes are the worse taxes. A person should be able to live free in a nation that promotes freedom.

astonerii on January 16, 2013 at 11:57 AM

Well, that whole “that among these are Life, Liberty and the pursuit of Happiness” part initially ended with “property”, but there was a slight issue at the time with keeping it in there.

LoganSix on January 16, 2013 at 12:04 PM

Property taxes are the worse taxes. A person should be able to live free in a nation that promotes freedom.

astonerii on January 16, 2013 at 11:57 AM

Property taxes are the only kind that goes straight to the local authorities rather than the state or the feds. That’s libertarianism in its literal sense. If only 70% of them weren’t spent on “pablik edoukaishn”…

Archivarix on January 16, 2013 at 12:05 PM

A Sales tax is the fairest way to collect revenue. It gets everybody — even the ones who pay no income or property taxes. The more you spend, the more you pay.

supersport667 on January 16, 2013 at 12:02 PM

Well, the fairest tax is a flat rate tax… Say for a 3.6 trillion dollar budget and 300 million people, that means every man woman and child, citizen, immigrant or illegal owes the princely sum of $12,000.

You idea is the second fairest, as when you spend money, you are enjoying the benefits of the nation, and thus the more you spend, the more you enjoy those benefits and should pay for them.

astonerii on January 16, 2013 at 12:05 PM

Property taxes are the worse taxes. A person should be able to live free in a nation that promotes freedom.

Property taxes are bad because they are based on the current assessed value of property not on some fixed or graduated scale, which often drives long time owner out of their homes in areas that experience recent great demand and fast rising home prices which lead to rising property taxes for all, unless protected by something like California’s Prop 13.

hawkeye54 on January 16, 2013 at 12:06 PM

Property taxes are the only kind that goes straight to the local authorities rather than the state or the feds. That’s libertarianism in its literal sense. If only 70% of them weren’t spent on “pablik edoukaishn”…

Archivarix on January 16, 2013 at 12:05 PM

Actually, it is not libertarian. Libertarian would argue that your property is your property, and just because some local group of vigilantes annexes your land into their community should not give them first dibs on your property rights. Cedar Rapids did it all the time. They would annex farm land, and then rezone it into residential. Making it worthless for farming and forcing the sale of the land to politically favored contractors who built homes on it. Then they got to tax it.

The libertarian would argue for local sales taxes, thus allowing those who live there to determine if they want to pay for the government they are getting.

astonerii on January 16, 2013 at 12:09 PM

A Sales tax is the fairest way to collect revenue. It gets everybody — even the ones who pay no income or property taxes. The more you spend, the more you pay.

As long as it stays a tax paid by the final consumer, and not a VAT, strung along all the way from raw material to end user and every step in between.

hawkeye54 on January 16, 2013 at 12:09 PM

You idea is the second fairest, as when you spend money, you are enjoying the benefits of the nation, and thus the more you spend, the more you enjoy those benefits and should pay for them.

astonerii on January 16, 2013 at 12:05 PM

IMHO, a consumption tax is a little less fair but the benefit it has of convincing people to save is worth it. Because look where a culture of “buy it now on credit” has got our culture.

MelonCollie on January 16, 2013 at 12:10 PM

North Carolina is also talking about doing this.

crazywater on January 16, 2013 at 12:11 PM

The libertarian would argue for local sales taxes, thus allowing those who live there to determine if they want to pay for the government they are getting.

astonerii on January 16, 2013 at 12:09 PM

While I agree that property tax is not without a problem for a true libertarian, I could live with it. Some services, such as police coverage, beautification, or road maintenance, can only be provided on a collective basis; the real problem is that municipalities provide 10 times more services than truly needed, and spend twice more on overhead. Incorporation of municipalities is the right solution here, I believe.

As for local sales tax, it sounds fair but is a royal pain to collect and tends to encourage barter and black market sales. Anything that prompts distortion of normal market exchange cannot possibly be good.

Archivarix on January 16, 2013 at 12:16 PM

Kill the income tax? No! Consider the consequences of doing that wbefore you slash most spending. You’ll just shift the load from the worker to the retired and poor in the form of property seizing levels of property taxes.
The problem folks -isn’t taxes–it’s politicians spending other people’s money to play god, buy votes, and gain political power.

Don L on January 16, 2013 at 12:19 PM

North Carolina is also talking about doing this.

crazywater on January 16, 2013 at 12:11 PM

Yup.
No Income Tax NC.org

LoganSix on January 16, 2013 at 12:19 PM

As for local sales tax, it sounds fair but is a royal pain to collect and tends to encourage barter and black market sales.

Archivarix on January 16, 2013 at 12:16 PM

Only if you take it to hideous extremes, Archie. Civilized people have advanced beyond “a coincidence of wants” long ago, and the black market is often dangerous. (there’s a REASON they call it the black market – because it’s dark, scary, and the sellers are often shady)

MelonCollie on January 16, 2013 at 12:20 PM

Wonder if these states have/will try to get right to work past in their capital.

Nebraska already is a right-to-work state.

Property taxes have been a major complaint in Big Red country for a long, long time. So have gas taxes. And the annual reevaluation battles every year are a major headache for all concerned. (Our county treasurers review the worth of properties every so often, and Ghu help you if a high end property sold recently in your area. Your property taxes are going to sky rocket.) Our problem is that we cover a huge geopgraphical area with a very low population. For example, Cherry County, Nebraska’s largest county at 6010 square miles, had a population of 6,148 people in the 2000 census. That is barely more than one person per square mile. But Cherry County has town and county governments to support as well as schools. And it has roads that must be maintained even if rush hour traffic consists of two vehicles meeting at a crossroads. Nebraska has several other counties smaller than Cherry with the same population density and the same needs.

What Heineman is trying to do is make Nebraska more financially competitive with low tax areas of the country. We’ve lost out on several opportunities to bring big companies with many good paying jobs because our taxes are too high.

If I didn’t have to shell out massive amounts of money each March and August, I wouldn’t mind paying a little extra in sales tax and paying it on more items.

catsandbooks on January 16, 2013 at 12:20 PM

Some services, such as police coverage, beautification, or road maintenance, can only be provided on a collective basis

Then if you live in a particular zone, then pay the subscription fee for those services.

Heck, I would be much happier knowing that a certain number of police officers were always patrolling my area because that’s what they were being paid to do. And if that police officer needed backup from armed citizens, he could easily ask for it, since he knew the people he served and protected.

LoganSix on January 16, 2013 at 12:23 PM

Only if you take it to hideous extremes, Archie. Civilized people have advanced beyond “a coincidence of wants” long ago, and the black market is often dangerous. (there’s a REASON they call it the black market – because it’s dark, scary, and the sellers are often shady)

MelonCollie on January 16, 2013 at 12:20 PM

While I agree that some black things are scary and shady – a certain individual in the White House comes to mind as a poster example – the term “black market” does not mean “goods of questionable value purchased in a dark alley from a masked individual”. It is just an historical term for the aggregation of market transactions performed without being reported to fiscal authorities. To put it simply, local government does not have the resources to enforce its sales tax.

Archivarix on January 16, 2013 at 12:26 PM

catsandbooks on January 16, 2013 at 12:20 PM

Well said. Nebraska beats the heck out of Illinois, where I grew up. My relatives there would love to live in a place like Nebraska. They really should move here and make us a redder state. :-)

NebCon on January 16, 2013 at 12:28 PM

Then if you live in a particular zone, then pay the subscription fee for those services.

Heck, I would be much happier knowing that a certain number of police officers were always patrolling my area because that’s what they were being paid to do. And if that police officer needed backup from armed citizens, he could easily ask for it, since he knew the people he served and protected.

LoganSix on January 16, 2013 at 12:23 PM

If I don’t subscribe but my neighbors do, the police will still patrol the street where I live. The park that I didn’t subscribe to will still produce the oxygen, and I’ll shamelessly breathe it in; it will also increase my property value without me spending a cent. Moreover, I will not subscribe to a nice sidewalk that goes along my property – will someone have to make sure I never use it? The world based on municipal subscription would be a very, very uncomfortable one.

Archivarix on January 16, 2013 at 12:30 PM

I’d suggest that TX eliminate its income Tax too-’cept that we don’t HAVE an income tax.

annoyinglittletwerp on January 16, 2013 at 12:32 PM

jdpaz on January 16, 2013 at 11:44 AM

That’s all we need is low information voters from the blue states moving to the low tax red states and turning them into liberal cesspools.

Decoski on January 16, 2013 at 11:57 AM

I’m not concerned that layabout low-info voters are going to move en masse to red states — they’re layabouts! It’s those low-info voters that are already in Ohio, Michigan, Wisconsin, Virginia, Pennsylvania, etc — blue states with Republican governors. Get a portion of them to see the light and suddenly we have that landslide we’ve been promised.

jdpaz on January 16, 2013 at 12:37 PM

Cutting the taxes is just one side of the conservative coin. The other is killing state entitlements, and I don’t see those Governors moving in that direction.

Archivarix on January 16, 2013 at 12:40 PM

That would be a step in the right direction.

Income taxes need to be eliminated and replaced with simple sales taxes. That way there is no paperwork… no records to keep… no IRS agent looking at all of your affairs.

The idea is the fund the countries needs, not for the government to be Big Brother.

Axion on January 16, 2013 at 12:43 PM

Well said. Nebraska beats the heck out of Illinois, where I grew up. My relatives there would love to live in a place like Nebraska. They really should move here and make us a redder state. :-)

NebCon on January 16, 2013 at 12:28 PM

Encourage them to move to North Omaha and vote against Ernie. Gack! I can’t believe we’re in for another several years of his shenanigans.

But when Heineman says he wants to get rid of property tax, is he also including our beloved annual car tax? Even when I actually could have afforded to buy a new vehicle I refused to do so because of the outrageous annual property taxes.

catsandbooks on January 16, 2013 at 12:46 PM

Encourage them to move to North Omaha and vote against Ernie. Gack! I can’t believe we’re in for another several years of his shenanigans.

catsandbooks on January 16, 2013 at 12:46 PM

You have no idea how many nasty jokes are made about Ernie being the perfect representative for local blacks. He is literally an insult to their community on a statewide basis.

MelonCollie on January 16, 2013 at 12:48 PM

Corporations should not be taxed…you can bet that any corporation, making money, paying employees, is more than contributing to the tax base.
Our state of NC has lost so many great opportunities because they won’t negotiate aggressively for business…just miles from our borders are major auto manufactures, Caterpillar building a new plant, all because we want them to pay their “fair share”…

right2bright on January 16, 2013 at 1:00 PM

You have no idea how many nasty jokes are made about Ernie being the perfect representative for local blacks. He is literally an insult to their community on a statewide basis.

MelonCollie on January 16, 2013 at 12:48 PM

Then why do they keep voting him back in? Of course, their other choice this year wasn’t so hot either — a woman who gambled away huge chunks of campaign money. But even if Council hadn’t gotten caught with her hand in the cookie jar big time, I think ernie would be back in the Legislature.

catsandbooks on January 16, 2013 at 1:00 PM

If I don’t subscribe but my neighbors do, the police will still patrol the street where I live.

Archivarix on January 16, 2013 at 12:30 PM

Yes, but they’ll just sit at your stoop and catch the guy who just shot you, instead of going in and getting him. Likewise, the fire department will make sure your house fire doesn’t catch the paying houses on fire and watch yours does a nice controlled burn to the ground.

What public parks do you speak of? Why is the government owning any land? Sure, you can breath the air, you just can’t walk your dog on someone’s private park without the possibility of them shooting you for trespassing.

LoganSix on January 16, 2013 at 1:07 PM

Nebraska may be a Red State, but we pay Blue State taxes. We have 3% unemployment, but with all the constant whining about “how we need to do more”, you would think it was 15%.

RADIOONE on January 16, 2013 at 1:07 PM

Corporations should not be taxed…

right2bright on January 16, 2013 at 1:00 PM

Because corporations do not pay taxes or fees. The customers of the corporation pay those taxes and feeds.

It is pretty simple logic, lost on most people.

LoganSix on January 16, 2013 at 1:09 PM

I’m not concerned that layabout low-info voters are going to move en masse to red states — they’re layabouts! It’s those low-info voters that are already in Ohio, Michigan, Wisconsin, Virginia, Pennsylvania, etc — blue states with Republican governors. Get a portion of them to see the light and suddenly we have that landslide we’ve been promised.

There once was a time when some localities provided bus fare to cities in California for their most flagrant layabouts, giving them glowing reports of what California would gladly provide for them once they got there, and made sure they were aboard and on their way to the Land of Fruits, Nuts & Flakes.

hawkeye54 on January 16, 2013 at 1:10 PM

As for local sales tax, it sounds fair but is a royal pain to collect and tends to encourage barter and black market sales. Anything that prompts distortion of normal market exchange cannot possibly be good.

Archivarix on January 16, 2013 at 12:16 PM

As a Nebraska retailer, I have no problem collecting sales tax. My point-of-sale software tells me how much to collect on everything I sell. If I don’t have access to that program, I merely multiply the sales times .07. It’s not hard at all.

Every garage and yard sale in America is most likely a “black market” exchange. And it’s not a sales tax that creates an out sized “black market” — it’s the economy. The more people need money, the more willing they are to barter and trade.

catsandbooks on January 16, 2013 at 1:11 PM

Then why do they keep voting him back in? Of course, their other choice this year wasn’t so hot either — a woman who gambled away huge chunks of campaign money. But even if Council hadn’t gotten caught with her hand in the cookie jar big time, I think ernie would be back in the Legislature.

catsandbooks on January 16, 2013 at 1:00 PM

That’s the other half of the jokes; that a gawdy, loud, stupid clown of a man is their perfect representative.

Frankly I don’t feel any more sorry for laughing at them than I do at Obama voters. They don’t have guns to their empty heads, they willingly and repeatedly voted for someone who doesn’t have the sense of a lobotomized monkey. Long past due for some jeering IMO.

MelonCollie on January 16, 2013 at 1:11 PM

As for local sales tax, it sounds fair but is a royal pain to collect and tends to encourage barter and black market sales. Anything that prompts distortion of normal market exchange cannot possibly be good.

Archivarix on January 16, 2013 at 12:16 PM

True, but your preferred approach requires individuals and employers to willfully report income, something I doubt is being done by all of our 20 million illegal aliens…

For illegals, it’s hard to avoid paying any sales tax, but pretty easy to avoid paying income tax.

dominigan on January 16, 2013 at 1:13 PM

There once was a time when some localities provided bus fare to cities in California for their most flagrant layabouts, giving them glowing reports of what California would gladly provide for them once they got there, and made sure they were aboard and on their way to the Land of Fruits, Nuts & Flakes.

hawkeye54 on January 16, 2013 at 1:10 PM

Hahaha! I love it! Sounds like a revamped version of “Greyhound therapy” that some places had to do when the idiot liberals closed the nuthouses.

MelonCollie on January 16, 2013 at 1:14 PM

Because corporations do not pay taxes or fees. The customers of the corporation pay those taxes and feeds.

It is pretty simple logic, lost on most people.

Because too many people are liberals, or have been raised and taught by liberals, they sadly lack sufficient cognitive skills so even the most basic and simple logic eludes them.

hawkeye54 on January 16, 2013 at 1:14 PM

I live in Illinois, my son goes to the University of Nebraska-Lincoln. I didn’t want him educated here. I’m happy Nebraska is pursuing business friendly policies. Go Huskers!

Cpoy2 on January 16, 2013 at 1:23 PM

catsandbooks on January 16, 2013 at 12:46 PM

Yeah, our car taxes here are a joke, but that’s just because of our low population. I look at it as the price of keeping out the riffraff. I paid $50 to license my first car in Illinois, but that state compensates through exorbitant tolls.

NebCon on January 16, 2013 at 1:34 PM

Cpoy2 on January 16, 2013 at 1:23 PM

Sadly, UNL profs are probably just as crazy liberal as those in Champaign. I still root for the Illini, to no avail. We hope your son stays here!

NebCon on January 16, 2013 at 1:39 PM

As long as it stays a tax paid by the final consumer, and not a VAT, strung along all the way from raw material to end user and every step in between.

hawkeye54 on January 16, 2013 at 12:09 PM

given the blue state fears about “tax exodus”, you will likely see a VAT system so that each state gets a piece of the final pie before the final consumer pays the total bill. Short term thinking of course that will lead to changes in the production chain and further penalize the higher tax states but long term planning in inter-state dealings usually correlates with how long the idiots have remaining in office.

teejk on January 16, 2013 at 1:55 PM

NebCon on January 16, 2013 at 1:39 PM

Unfortunately, our education system is saturated with crazy liberal professors. He scored 35 on his ACT exam. UNL offered him three scholarships, University of Illinois….nothing. My son started last fall. So far, no complaints from my son about nutty liberal professors at UNL. He’s pretty conservative and in tune with current events. I’m sure he’ll run into them soon enough. I fall in love with Nebraska every time I visit, very friendly people.

Cpoy2 on January 16, 2013 at 1:58 PM

Cpoy2 on January 16, 2013 at 1:58 PM

That’s impressive! Good for him. You’re welcome to move here too!

NebCon on January 16, 2013 at 2:29 PM

NebCon on January 16, 2013 at 2:29 PM

Thanks, very proud of my son. My husband and I are actually looking to move out of Illinois, might just take you up on that.

Cpoy2 on January 16, 2013 at 2:45 PM