LINCOLN — Nebraska's largest business groups are opposing — or at least not endorsing — Gov. Dave Heineman's tax overhaul proposals.
Among the opponents are the Nebraska Chamber of Commerce and Industry, the Nebraska Bankers Association, the Nebraska Retail Federation and the local chapter of the National Federation of Independent Business.
The Greater Omaha Chamber of Commerce issued a statement Tuesday saying the group's executive committee can't support the two tax bills “as currently drafted.”
Omaha Chamber of Commerce President and CEO David Brown said the organization will testify in a neutral position, rather than in opposition, at legislative hearings today and Thursday in an effort to keep the discussion going.
“Analysis of the measures by the chamber and member businesses shows that they would result in significant uncertainty for many businesses, and, in many cases, a significant increase in overall costs due to sales taxes that would be imposed on items such as manufacturing inputs and energy,” Brown said.
“The effect of the proposals on manufacturing and processing, hospitals, nonprofits and a number of others would be counter to their intent and carry risk of driving some businesses out of Nebraska,” he said.
Some manufacturers have said the end of the exemptions could threaten their ability to remain competitive and even prompt them to take their manufacturing operations out of state.
The Platte Institute, an Omaha think tank, plans to testify in support of the bills, with an asterisk. Director Jim Vokal said the group does not support the idea of taxing business inputs such as materials, energy and equipment.
The lack of business support delivers a major blow to the chances of Heineman's tax plan winning legislative approval. The governor has said his proposal would help Nebraska grow and attract more jobs to the state.
The governor did not comment Tuesday in response to a request for his reaction to the business opposition. Questions related to business reaction are sure to arise at his scheduled 10 a.m. press conference. Heineman is also scheduled to testify at today's Revenue Committee hearing.
He has said he offered the proposal to get a conversation started about taxes in Nebraska. He has invited businesses and individuals to offer alternative ideas to reach the goal of improving the state's tax climate.
State Sen. Brad Ashford of Omaha vowed to continue fighting to reduce or eliminate the state's individual income tax.
“I'm committed to its passage,” said Ashford, who is co-sponsoring the two tax bills with Omaha Sen. Beau McCoy on behalf of the governor. “I'm committed to find a way to significantly reduce the tax burden on all Nebraskans.”
Ashford said he believes Nebraskans can find a way to cut individual income taxes without overly burdening any one sector of the economy. He would be willing to let the corporate income tax stay in place and extend sales taxes on services.
Joe Henchman, an attorney and policy analyst for the Tax Foundation, said he would be more inclined to tax services than to tax business inputs.
He said public finance experts agree that sales taxes should be charged only on the final retail sale because charging sales taxes on the materials that go into products leads to taxes on taxes.
The governor has often cited Nebraska's “mediocre” ranking on the Tax Foundation list of states as a reason to make the tax changes.
The Tax Foundation's Henchman said eliminating the state income tax would be “doable” for Nebraska. However, he would not say whether Nebraska should take that step.
“I think it's worth considering,” he said.
Brown said the chamber wants to continue talking about tax changes and wants to continue searching for a tax structure that will help make the state more competitive.
The governor's main plan, embodied in Legislative Bill 405, would eliminate all Nebraska corporate and individual income taxes, including those levied on retirees.
He would replace the $2.4 billion worth of annual income tax revenue by ending 27 sales tax exemptions worth an equal amount of money.
A less ambitious version of his plan, spelled out in LB 406, would end corporate income taxes and lower income taxes on Social Security and other retirement income. It would require the elimination of $395 million worth of sales tax exemptions.
Omaha Mayor Jim Suttle also announced his opposition to the governor's tax plan Tuesday.
In a statement, Suttle said the plan is short-sighted and shifts the tax burden to middle class and lower-income families.
“If the governor is serious about tax reform, I would urge him to bring all stakeholders to the table to develop a comprehensive tax package that is fair, balanced and benefits all Nebraskans,” the mayor said in a statement.
Suttle took the position even though cities could reap a sales tax windfall under the governor's plan because they would get revenue from previously tax-exempt items.
Heineman responded that there are fundamental differences in philosophy between himself and Suttle.
“Mayor Suttle has a proven track record of raising taxes on Omahans. I have a proven track record of lowering taxes for Nebraskans,” the governor said.
Contact the writer: 402-473-9583,
Read David Brown's full statement
The Greater Omaha Chamber executive committee cannot support the tax reform bills, LBs 405 and 406, as currently drafted. Rather, it has adopted a neutral position and looks forward to a continuing discussion to explore ways to improve Nebraska's tax climate for employers and individual taxpayers.
Analysis of the measures by the Chamber and member businesses shows that they would result in significant uncertainty for many businesses, and in many cases a significant increase in overall costs due to sales taxes that would be imposed on items such as manufacturing inputs and energy. The effect of the proposals on manufacturing and processing, hospitals, non-profits, and a number of others would be counter to their intent and carry risk of driving some businesses out of Nebraska.
The Chamber's executive committee does believe in continuing to pursue a tax structure that will help to make our state more competitive for jobs and talent. While it cannot support LB 405 or LB 406, it has directed staff leadership to testify in a neutral position at Wednesday's hearing before the Revenue Committee of the Nebraska Legislature so that discussion of improving the state's employer tax climate can continue.
The Greater Omaha Chamber has long supported making Nebraska's tax structure more competitive for jobs and population growth. The Chamber's executive committee applauds Gov. Heineman and Senators Beau McCoy and Brad Ashford for beginning this important discussion. We support exploring ways to create a strong business climate for Nebraska to realize the most prosperous future possible.
David G. Brown
President and CEO
Greater Omaha Chamber
Read Jim Suttle's press release
Omaha Mayor Jim Suttle believes Nebraska is in great need of tax reform, but is concerned that Governor Heineman's plan will hurt too many Nebraskans. Today the Mayor announced his opposition to Heineman's tax proposal calling it a shortsighted plan that shifts the tax burden to middle class and lower-income families. “If the Governor is serious about tax reform I would urge him to bring all stakeholders to the table to develop a comprehensive tax package that is fair, balanced and benefits all Nebraskans,” said Mayor Suttle.
The current tax proposal sponsored by Senators Brad Ashford and Beau McCoy would require; everyone, including senior citizens on a fixed income to pay more for prescription drugs, nonprofit hospitals would see significant increases in operating costs, and students at local Universities would be forced to pay sales tax on their room and board. Agriculture and manufacturing businesses would face new taxes, raising the price of food and consumer goods, and in some cases resulting in a double tax.
“Nonprofit organizations and churches who work to combat poverty and reduce violence in our city would be taxed under this proposal,” said Suttle. “Private schools that have lived under threat of closing may find the tax burden too much to remain open.”
“I believe it is irresponsible and premature to start counting on a 'windfall' of sales tax dollars without asking where the money will come from, or knowing whether such a windfall will even materialize,” said Mayor Suttle. “Of course I would support property tax relief if the city saw a substantial increase in sales tax revenue, but I will not support a proposal that raises revenue by taxing prescription drugs, nonprofits, churches, and students. This is a regressive tax shift that burdens Omaha citizens, nonprofits, and businesses.”
Mayor Suttle has heard from non-profit organizations and businesses who have expressed concerns about the long-term effects of Governor Heineman's proposal. “Comprehensive tax reform will prevent the need for unexpected tax increases in the future when we are faced with a tough economy,” said Suttle. “It is crucial for policy makers to include the business community, non-profits, hospitals, education leaders, and faith organizations in the process of establishing fair, balanced, long- term tax reform in Nebraska.”
Contact the writer: 402-473-9583, firstname.lastname@example.org