Dear Fellow Nebraskans:
As we begin the 2014 Legislative Session, I outlined in my State of the State address to the Legislature that Nebraskans deserve tax relief. I emphasized that I look forward to working with the Legislature and our citizens to keep Nebraska moving forward.
I want to thank our citizens for their dedication and commitment to their communities, our state and the United States of America. Our Nebraska values of personal responsibility, family, hard work and fiscal responsibility have kept Nebraska in better shape than the rest of the country.
We've learned how to compete in global markets. We've strengthened Nebraska's education system by focusing on academic excellence and academic improvement. We care about our children and their future. That's why the biggest and most important issue facing the State of Nebraska now and into the future is high taxes.
There are basic economic principles that are critical for our economy. Tax relief is a major driving force for economic success. Nebraska's strong agriculture economy won't continue to exist with unreasonably high property taxes. When agriculture fares poorly, so does rural Nebraska.
The success of small businesses is also an essential component of Nebraska's economic vitality. High taxes limit their growth and their ability to create new jobs. Over the past decade, median family incomes in Nebraska have declined. Food prices are up, health care costs are increasing and middle-class family take-home pay is down.
In a recent study, the Tax Foundation, a highly respected national non-partisan tax research group, reported that there are "significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy." It went on to state, "Taxes on income and wages reduce the incentive to work. Progressive income taxes, where higher income is taxed at higher rates, reduce the returns to education, since high incomes are associated with high levels of education, and so reduce the incentive to build human capital."
Tax issues are multifaceted in Nebraska. Local governments decide property tax rates. State government sets income tax and sales tax rates. I appreciate the discussion that the Tax Modernization Committee had regarding taxes, but it's time for the Legislature to act.
When local government spending increases, property taxes go up. We need our partners in local governments to slow the rate of growth in local spending in order to achieve real property tax relief.
In rural Nebraska, record high property taxes are hurting our farmers and ranchers because they have experienced dramatic growth in ag land values. Without action, their economic prosperity is at risk. We can help our farmers and ranchers by supporting the Nebraska Farm Bureau proposal to lower ag land valuations from 75 percent to 65 percent.
That's one part of tax relief. The other challenge is Nebraska's high income taxes and the Nebraska Legislature sets those rates. Nebraska's income tax rates are among the highest in America and higher than all of our neighboring states except one. Lowering Nebraska's income tax rates are essential to attracting higher paying jobs.
The bottom line is this: taxes are too high in Nebraska and we can do something about it. We can help Nebraska's middle-class families, farmers, ranchers and small business owners this session.
Nebraska can afford tax relief.
This week, I reported to the Nebraska Legislature that Nebraska can afford up to $500 million in tax relief over the next three years. The State of Nebraska has $1.2 billion in cash in its checking and savings accounts and Nebraska is over taxing its citizens right now. We need to change that. Nebraska has a growing economy, a strong cash reserve and we have worked hard to control state spending.
The choices we make today are about Nebraska's future. We need to increase the take-home pay of Nebraskans by providing them tax relief.
- Dave Heineman