* * *
LINCOLN — Nebraska Gov. Dave Heineman declared Wednesday he will fight the big business lobby to preserve his plan to eliminate state income taxes.
During a press conference at the State Capitol, the governor reacted to Tuesday's news that some of the state's largest business interests will not support his tax reform proposals.
“Big business with their highly paid lobbyists are trying to protect their special interest exemptions,” he said. “I understand that.”
Surrounded by military veterans who support his plan to abolish taxes on income, Social Security, military retirements and pensions, the governor called upon state lawmakers to stand up for middle class Nebraskans and small businesses.
“I'm prepared to take them on,” he said, referring to those aligned against his plan. “I hope the Legislature stands with me.”
On Tuesday, the Nebraska Chamber of Commerce & Industry, the Nebraska Bankers Association, the Nebraska Retail Federation and local chapter of the National Federation of Independent Business all announced their opposition. The Greater Omaha Chamber of Commerce will take a neutral stance, but the group's director raised serious concerns about parts of the governor's plan.
The governor's most ambitious approach, reflected in Legislative Bill 405, would abolish all Nebraska corporate and individual income taxes. He wants to replace the $2.4 billion in income tax revenue by repealing 27 state sales tax exemptions worth an equal amount.
The governor has said eliminating income taxes is the best way to improve the state's ranking in national tax ratings, which in turn will attract new businesses and jobs.
The governor plans to make his case today during a public hearing on LB 405 before the Legislature's Revenue Committee.
The least palatable element to business interests is the governor's proposal to charge sales tax on manufacturing components and ingredients. Several manufacturers have said they can't remain competitive with such a tax, so they would have to shut down operations and leave Nebraska.
Heineman also has proposed a scaled-down version of his plan, which would eliminate corporate income tax and reduce taxes on Social Security and other retirement income. Detailed in LB 406, the secondary approach would make up the lost revenue by ending $395 million of sales tax exemptions.
The Revenue Committee will conduct a hearing on LB 406 Thursday.
Contact the writer: 402-473-9587, email@example.com