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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