Solution to Nebraska's Broken Tax System Could be EPIC
Supporters' signatures vital to getting proposed relief amendment on 2024 ballot
June 15, 2023
A large percentage of Nebraskans are frustrated by the Byzantine tax system in Nebraska, with its myriad of exemptions and special-interest benefits that end up ranking Nebraska 38th highest out of 50 states in overall tax burden. And in a state where 100% of the tax burden falls on just 60% of the population, support for an overhaul in Nebraska's tax system is growing.
Many Nebraskans were cheered to hear of the recent tax-cut legislation that was passed, only to have their optimism brought back down to earth when new property-evaluations were received, dramatically raising the property taxes of some with apparently little reason, while others received no increase at all. The EPIC Option looks to dramatically change the way taxes are collected and spread the burden more evenly, cutting back on exemptions and creating more fairness in revenue collection.
The cornerstone of the EPIC Option is the elimination of five taxes: Property, Income, Inheritance, Corporate and Sales. The plan does not look to raise or lower the amount of overall tax revenue generated by the state, only to change the way these taxes are collected to not only ensure fairness, but to spur economic growth.
On Saturday evening, Mark Bonkiewicz gave a presentation to a group of citizens at Dude's Steakhouse in Sidney detailing the benefits of the EPIC Option, and the challenges it faces getting passed and enacted. The meeting was done on short-notice, and with Gold Rush Days and rainy weather in the evening, the event was lightly attended but those who did show up were very attentive to the presentation.
Billed as a bold and innovative proposal that will maximize local control of taxes while benefiting tax payers, not tax collectors, the EPIC Option was introduced to the Revenue Committee in January by Senator Steve Erdman. Five other senators have also endorsed the bill, which was amended by Erdman in February. Now, the EPIC Option team members are organizing a petition drive to ensure Nebraska voters will have the EPIC Option on their ballots in November of 2024. 160,000 signatures are needed, with 5% of 38 counties represented. The deadline for validation is July 1, 2024.
The petition would authorize two separate amendments, the first being to implement the EPIC Option, and the second to exempt groceries from sales tax. The first must pass for the second to be necessary.
Bonkiewicz went into extensive detail about the plan, from its elimination of property and income taxes, to shifting revues from a sales tax to consumption tax model. The EPIC team did an exhaustive analysis of the amount of revenue needed to replace the current amount that comes in through property, income, inheritance and corporate taxes and found that the EPIC option would require a 7.23 rate to be revenue neutral. The amended Bill moved the rate to 7.5%, an increase just to raise $100 million as a buffer for the first year of the tax. After detailing how our current tax system is making Nebraska less competitive and driving out college graduates and forcing farmers and ranchers to sell their properties, Bonkiewicz explained how the elimination of property taxes and income taxes would benefit all Nebraskans, not just property owners and high-income individuals.
"These changes will benefit everybody in Nebraska as we'd immediately experience an economic upswing that would provide opportunities for everyone while attracting business to move to Nebraska and encourage current residents to start their own businesses," said Bonkiewicz. Elimination of sales taxes and replacing them with a Consumption Tax would exempt all used item purchases from sales or consumption taxes. Basically, the things you buy new would be taxed, but if they were ever resold (like a used car, for example), no sales tax would be owed. Items purchased by business or for your own business wold not be taxed, and groceries would not be taxed.
Bonkiewicz then detailed the many misconceptions, and some flat-out misstatements, about the EPIC Option. Certain studies are cited by opponents of the EPIC Option showing flaws in the math and valuations, but in each case, the study itself did not actually study the EPIC Option, was a static rather than dynamic study, and failed to factor in an additional $61 billion in taxable sales due to the elimination of sales tax exemptions.
"A study has to be dynamic, showing all of the factors and the results after transitioning to the EPIC Option. A static study is like taking a picture of a basketball player shooting a shot and asking what happened before he took the shot? Or what happened after he took the shot? You don't know because its only showing one point in time. A dynamic study shows all of the factors prior to implementation, and the effects after implementation, which are significant and change the numbers dramatically," Bonkiewicz said.
There are many facets about the EPIC Option that are explained in detail at the group's website, epicoption.org.
The organizers are asking all Nebraskans to take a look at the proposal, how it changes the way revenues are collected, and positions Nebraska to benefit from economic growth spurred by these changes. Also, there are many answers to objections brought about by opponents that want to keep the status quo and keep Nebraska a high-tax state.
Bonkiewicz and other members of EPIC Option will be very busy over the coming months, educating as many Nebraskans as possible about the plan while gathering the signatures necessary to put the measure on the ballot.
When the EPIC Option group returns to the Cheyenne County area, be sure to check out their presentation and decide for yourself whether or not the EPIC Option is the right move for Nebraska's future.