The writer is president of the Nebraska State Education Association. She writes on behalf of Rebuild Nebraska, a coalition of Nebraska residents and more than 25 organizations whose focus is fiscal policy.
The basic law of physics is that every action has an equal and opposite reaction. Sir Isaac Newton’s 300-year-old theory applies equally as well to Nebraska’s tax debate: The revenue the state would give up in tax cuts would have to be offset somewhere else.
In the case of a pair of bills before the Legislature’s Revenue Committee that call for significant income tax cuts — LB 1097 and LB 721 — the Newtonian consequences would come in the form of higher property taxes or in sharp cuts to schools, community colleges and other investments we depend on to grow and prosper.
The simple fact is that taxes pay for the things we all need. In Nebraska, more than 80 percent of the taxes we pay to the state support education and health care.
Estimates show that LB 1097, when fully implemented, would cost Nebraska about $400 million annually. That is nearly half of what Nebraska spends each year on state aid to K-12 education. Estimates show that the tab for LB 721 when fully implemented would be nearly $500 million annually, which is more than half of the state’s K-12 budget.
LB 721 also calls for agricultural land to be valued at 65 percent of its full market value for tax purposes, rather than its current 75 percent level. On the surface, that would appear to lower property taxes. In truth, it would actually require the vast majority of Nebraskans to pay higher property taxes.
That’s because the taxes that would otherwise be paid by farmers and ranchers would shift to other property owners. In more rural areas, where there are fewer non-ag property owners to take that load, even producers would feel the pain as tax levies increased.
State senators, conducting the public hearings of the Tax Modernization Committee last year, heard a constant and unwavering drumbeat of support for property tax relief. Passage of measures that would do the opposite would be a troubling sign that our legislators are not listening to their constituents.
Unlike previous proposals to eliminate or cut the state’s income taxes — which would have been very damaging themselves and would have benefited only a small minority of well-off Nebraskans — LB 1097 and LB 721 make no attempt whatsoever to replace the large chunks of revenue the state would lose.
That would leave Nebraska with two choices: Cut funding for our schools, roads and other hallmarks of our state’s strong economy, or pass the buck to the local level, where school districts and other local entities would be forced to raise property taxes or cut services.
Proponents of LB 1097 and LB 721 say the tax cuts are needed to create jobs — a mantra that persists despite the fact that careful, mainstream economic research has found no conclusive link between income tax cuts and job growth.
In fact, since Kansas significantly cut income taxes in 2012, it has trailed four of its five neighbors — including Nebraska — in job growth.
Nebraskans understand there is no free lunch, that you get what you pay for. The price we would pay in higher property taxes and the loss of needed services would far outweigh any benefits of the proposed tax cuts.