By Deena Winter | Nebraska Watchdog
LINCOLN – Nebraska lawmakers talked Tuesday about setting up a tax reform study that would culminate in a proposal during the 2014 legislative session.
Columbus Sen. Paul Schumacher introduced a bill authorizing a study of how to modernize Nebraska’s tax code — which is what Gov. Dave Heineman said Saturday he wanted after it became clear his proposal to end the state income tax was likely to die in committee.
The governor’s tax cut would have been paid for by ending $2.4 billion worth of sales tax exemptions, prompting fierce opposition from those who would have to begin paying the tax, particularly farmers and manufacturers.
Schumacher said the study would address property taxes, income taxes, the sales tax base and economic development incentives. Omaha Sen. Bob Krist suggested during a public hearing on the bill Tuesday that it also examine occupation taxes and tax increment financing.
Although the bill didn’t include the Revenue Committee, the chairman of that panel, Kearney Sen. Galen Hadley, said he’s working on an amendment to move jurisdiction to his committee, with members of the study group from other committees, too.
“I want to make it clear that this committee is not out to lower everybody’s taxes in the state of Nebraska,” Hadley said. He said his goal is to find the most equitable way to pay for state government, with a proposal ready by the 2014 session.
Heineman’s income tax proposal — which is expected to be killed by Hadley’s committee Wednesday — brought out hoards of people and spurred interest in tax reform.
“There’s an interest now,” Hadley said. “We need to kind of strike while the iron is hot.”
The Nebraska Hospital Association, Nebraska State Education Association, the OpenSky Policy Institute (a think tank), a coalition of nonprofits and others testified in support of Schumacher’s tax reform bill.
Renee Fry, executive director of OpenSky, said Nebraska hasn’t seen comprehensive tax reform since 1967. She said the tax code is outdated, with inconsistencies like a tax on rental cars but not limos, and a tax on movies but not spas.
Schumacher said the prospect of a tax overhaul creates uncertainty among manufacturers considering investing in Nebraska, so the lawmakers need to act with “reasonable speed.”
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