The Nebraska state legislator continues to try to eliminate property, income and corporate taxes and replace them with a consumption tax.
LINCOLN, Nebraska (Nebraska) — State Senator Steve Erdman intends to change taxes in Nebraska through his LB79 priority bill.
“Starting again at [20]17, when I first arrived, my goal was to cancel or fix the property tax,” Erdman said. “We’ve been dealing with EPIC Option for the last three years.”
EPIC Option advocates the abolition of property, income and corporate taxes. It is proposed to replace these sources of state income with a consumption tax.
“We had a petition for a 30% cut. It failed. This was followed by a 35%, 35% petition for property tax cuts. This could not be stopped due to the pandemic. For the past three years, we have dealt with EPIC Option, which aims to eliminate all taxes on property, real estate and personal, all income taxes, corporate and individual, sales tax, and inheritance tax.”
Erdman made a distinction between a consumption tax and a sales tax, which his proposal eliminates: “A consumption tax is levied on the first person who buys something or a service that someone hires for personal use. A sales tax is levied every time something is sold,” he said.
Creighton economist and Economic Research Institute director Ernie Goss assessed the implications of this.
“I would argue that the consumption tax has less negative impact on economic activity than the alternative tax on income, property and part of the sales tax,” Goss said.
Some fear the 7.5% will not balance the state’s budget, including Brian Sloan of the Nebraska Chamber of Commerce and Rebecca Firestone of the OpenSky Policy Institute, both of whom testified at a committee hearing on March 3.
“They came to 22% and I invited these people to come to my office to prove to me that it is 22%. I would be more than willing to show them my office.
Erdman said his research was carried out by the Beacon Hill Institute.
The State Department of Revenue estimates that the bill would result in a loss of state money, resulting in “a net loss of revenue of $763 million in fiscal year 2025-2026, $2.3 billion in fiscal year 2026-27, and $5.1 billion US dollars in fiscal year 2027-2028. legislative release following committee hearings on LB79.
Opponents also argue that low-income people will bear most of the burden.
“It’s a legitimate concern,” Goss said. “But I think in terms of overall impact, I would say it’s coming back in the form of more economic activity. If you take into account the fact that your income, your salary will be higher. Your overall economic activity will be higher, so in my opinion, in the end, all Nebraskans will benefit from consumption, or what is sometimes called the EPIC tax.”
No other state in America has an EPIC Option, but Erdman pointed to states like South Dakota and Wyoming that have no income tax.
“Our current tax system is broken. We understood this a long time ago. We have been operating in the same broken tax system since 1967,” he said.
If the bill is not passed, the EPIC option group will lead a petition campaign to include the measure on the 2024 ballot – a similar effort failed in last year’s elections.
The constitutional amendment, LR264CA, lost by two votes last year to move forward in consideration.
This year, 6 other state senators co-sponsored the consumption tax bill, including state senator Tom Brewer, Robert Clements, Steve Halloran, Mike McDonnell and Dave Moorman.
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