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By Steve Erdman
District 47 

Straight Talk From Steve

LR262CA

 

February 9, 2022 | View PDF

Last Thursday the Legislature’s Revenue Committee held a public hearing at the Capitol on LR264CA, which is my resolution for a constitutional amendment for the consumption tax.

The resolution would put an initiative for the consumption tax on the ballot for the November 8 election. The time has come for the citizens of Nebraska to be given the opportunity to decide how they should be taxed.

I would like to begin by saying thank you to all those who drove to Lincoln to testify in person at the public hearing. I am honored that so many people came out to support this resolution.

Moreover, the testimonies they gave covered a wide range of relevant topics without repeating the same concerns.

The public hearing was a huge success. 29 citizens came out to testify in favor of the consumption tax. Not a single private citizens came out to testify in person against the consumption tax. In addition, 75 supporters of the consumption tax submitted online comments for the public record.

The lobbyists who testified against the consumption tax did a very poor job. These lobbyists were all paid to oppose the consumption tax, and each one proved that they had not read the bill, could not perform basic math skills, tried to deceive the members of the Revenue Committee, or did all three. Below are three examples of the kind of ridiculous and invalid testimonies offered by these lobbyists.

Mr. Brian Slone, who represents the Nebraska Chamber of Commerce & Industry, told the Revenue Committee that the State of Nebraska would have to collect $124,000 from every household in Nebraska in order for the consumption tax to be revenue neutral. That’s ridiculous! There are 759,000 households in Nebraska according to the latest census, so his numbers don’t come close to adding up. I’ll let you do the math to see how far off he really was.

A. Loy Todd Jr., representing the Nebraska New Car and Truck Dealers Association, tried to make the case that the State would lose money because people would buy their new cars across state lines; however, I reminded the members of the Revenue Committee in my closing comments that it does not matter where you purchase a new car because the taxes are paid, not at the car dealership, but at the courthouse! Therefore, the State would not lose so much as a dime.

Kent Rogert who represented the wine industry and who asked who would want to buy used wine (what exactly is used wine?), tried to make the case that wine would be double-taxed. He claimed that wine would first be subject to the consumption tax and then subject to the excise tax on alcohol. Rogert clearly did not read our bill or understand how the consumption tax works, because the consumption tax only taxes a good or service one time. Goods and services are classified as either subject to the consumption tax or subject to the excise tax, but never to both.

Finally, the biggest problem which has dogged the consumption tax ever since I first introduced it has been the premium tax on insurance policies. Currently, Nebraska imposes a very low one percent premium tax on insurance policies.

The worry has been that if insurance policies were subjected to the consumption tax, then the insurance premium tax rate would increase to 8.97 percent or 5.5 percent for the rate after the pre-bate gets factored in.

The good news is that we have solved the insurance premium tax problem. When the Beacon Hill Institute published their dynamic study on the consumption tax for the State of Nebraska back in January 2021 they did not include the insurance premium tax in their calculations for the consumption tax rate. Moreover, the insurance premium tax qualifies as a kind of excise tax.

Because the insurance premium tax is an excise tax, it cannot be made subject to the consumption tax. By rule, no good or service may be taxed twice under the consumption tax. Therefore, the insurance premium tax would remain (just as it currently is) at one percent under our proposal.

Not a single lobbyist was able to make a coherent or legitimate criticism against the consumption tax. Even the Open Sky Institute failed to show the committee members that they had actually read our plan because they falsely accused it of promoting a regressive tax. As you can see, there really are no good reasons to oppose the consumption tax. The consumption tax would solve all of our tax problems, make Nebraska the most tax friendly state in the Union, and create economic growth like we’ve never seen before.

 

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