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Straight Talk From Steve

Last week my consumption tax resolution was debated on the floor of the Legislature. LR11CA is my priority resolution for a constitutional amendment to repeal the income tax, property tax, sales tax and inheritance tax and to replace these taxes with a consumption tax. Today I regret to inform you that the resolution failed to advance, but don’t lose heart.

When I consider all that this constitutional amendment attempted to do, I am not so surprised that it failed. Change is hard. Change is especially hard in government, where people and politicians are used to doing things in a particular way. LR11CA sought to enact sweeping changes in the way we collect tax revenues in the state, and would have directed the Legislature to completely overhaul the tax code. To draw an analogy, this could be compared to an individual worker changing careers in midlife. These kinds of changes come with great fear of unknown repercussions.

In spite of these great fears, 23 state senators voted in favor of my resolution. In order for a constitutional resolution of this kind to succeed it requires 30 votes or 3/5 of the Senators in the State Legislature, according to Article XVI, Section 1 of the Nebraska State Constitution. Regardless of this shortfall in the vote, I believe we have made great strides forwards towards changing Nebraska’s tax policies.

Last Thursday the nationally acclaimed economist, Art Laffer, flew into Lincoln in order to visit with Gov. Ricketts and State Senators regarding Nebraska tax problems. According the Art Laffer, Nebraska has one of the absolute worst tax codes in the nation, and only West Virginia has seen less revenue and population growth than Nebraska.

Nebraska is in very bad shape. Art Laffer shared with the Senators a special map of the United States he created, which shows how Nebraska is losing revenue to nearly every state in the Union. The only states Nebraska is not losing revenue to are Alaska, Hawaii, Illinois, North Dakota, New Jersey, New York, and Rhode Island. That’s it! What his map tells us is that our tax code is preventing us from competing with other states, and unless we drastically reform our tax code, Nebraska will continue to race to the bottom.

So, the good news that I can report to you today is that Nebraska’s State Senators are finally beginning to understand our tax problems and how to fix them. It is utterly futile for us to try to fix our broken down tax code. Instead of fixing a system which cannot work, we need a brand new tax system which does work. According to Laffer, we need a brand new tax code which does the least amount of damage to the smallest number of taxpayers. In other words, we need a tax code with a low tax rate and a broad tax base, and that is exactly what the consumption tax is designed to do for Nebraska.

Art Laffer came to Nebraska to praise the consumption tax. According to Laffer, LR11CA would have set Nebraska on an excellent course for future prosperity. Therefore, I will continue to support the concept of a consumption tax and I will explore even more ways to make it happen in Nebraska. Support for the consumption tax idea is rapidly growing in Nebraska because it is the right solution for our tax problems. Because the consumption tax idea is catching fire all across our state, I will continue to fan those flames until it has the opportunity to enflame every heart, every soul, and every mind.

 

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