Meaningful, Sustainable Tax Relief

Meaningful, Sustainable Tax Relief

By Governor Dave Heineman

Dear Fellow Nebraskans:

An extraordinary thing is happening in Lincoln these days. Elected leaders are talking about tax relief, not spending, and the people of Nebraska will benefit.

I was pleased to begin the conversation with a tax-relief proposal that I believe offers a comprehensive approach to easing the burden on Nebraskans and their families.

Over three years, my proposal would put more than $421 million toward meaningful and sustainable income, sales and property tax relief. I am disinterested in tax relief that is here today, gone tomorrow, so we crafted a package that has the best chance of being permanent.

This package would roll back income taxes to 1997 levels, roughly a 3 percent reduction across-the-board. It would eliminate the sales tax on construction labor that penalizes people for hiring skilled labor to repair or maintain their homes or small businesses.

It would also add $174 million to the state aid formula for schools to accelerate property tax relief originally scheduled to occur in 2009. Nebraskans would instead begin seeing the first stages of relief next year and additional relief in the years to follow.

I want you to know that I have heard tax-relief critics describe my tax proposal as too expensive and others call it too modest. Both reinforce my confidence that we have found middle ground that is good for Nebraskans and good for our state.

This proposal is a logical extension of what I began shortly after taking office in January. I have been working hard to improve Nebraska's tax climate.

We have already passed the most sweeping jobs-creation economic development package in recent state history. I said after we passed the Nebraska Advantage Act that we would need to revisit our tax laws more often to remain competitive for the best jobs, and now our focus shifts to the tax laws that impact individual Nebraskans and their families.

During tight times, the state asked taxpayers to help balance the budget. Many senators described the need for additional taxes as short-term. They said taxes could be reduced once the economy improved. Well, times are better, and Nebraska needs to keep faith with its taxpayers. The time for tax relief is now.

The principles behind my proposal are simple: First, it focuses on individual Nebraskans and their families. Second, it is meaningful and sustainable. Third, it is fiscally responsible, allowing the state to protect against uncertainty by maintaining a prudent balance in the state's cash reserve fund.

The income tax component of the plan proposes nearly $150 million in tax rate reductions. A family of four, earning approximately $55,000 would receive more than $120 in income tax relief over the next three years.

The sales tax component of my proposal would cut nearly $100 million, eliminating a government burden whenever there is a need to hire a plumber or furnace repair specialist. And for our farmers, ranchers and homeowners, my proposal would accelerate property tax relief, lowering the school levy lid from $1.05 to $1.00 sooner, rather than later. On the average, over the next three years, this proposal would provide $125 in property tax relief for every $100,000 in assessed property value.

My goal is simple. I want to help continue Nebraska's economic progress by giving Nebraskans more of their money back by providing the good people of our state with targeted relief from income, sales and property taxes.

http://gov.nol.org/columns/2005/1212.html