Wednesday, January 10, 2007

Don't Believe Dave Heineman's "Tax Shift" Bullshit

by Kyle Michaelis
In one week, we will begin the discussion of Nebraska's future when I deliver the State of the State Address.

That discussion will center on providing real tax relief for our citizens and moving us toward a lower tax burden through the reform of our income tax system and providing tax relief aimed at middle-class Nebraskans.

Yet I also know that there is a need for our state to have an open, honest discussion about property taxes.

Ladies and gentlemen, our efforts at the state level to address local property taxes are a tax shift, not a tax cut . . . and each one increases state spending.

We should acknowledge them for what they are . . . and move forward with an honest resolve.
-Gov. Dave Heineman's Inaugural Address (01/04/2007)

The responsibility for providing property-tax relief should be borne not by the state - which has been out of the property-tax-levying business since 1966 - but by Nebraska's multitude of local tax-levying authorities.

Sure, it's obvious that the state will continue its general policy of providing state aid to, say, the public schools. At the same time, however, the state has gigantic financial burdens, and it is foolhardy to imagine that one more in Nebraska's long line of tax shifts is going to stave off the property-tax beast.
Omaha World-Herald Editorial, The Nebraska Mirage (12/27/2006)

Nebraska needs a strategic restructuring of its tax system, as Gov. Dave Heineman has pointed out. Will Sen. Ray Janssen of Nickerson, the new Revenue Committee chairman, pursue that important goal? Or will the strong appetite in the Legislature for a property-tax "cut" - that is, for a tax shift - prevail?
Omaha World-Herald Editorial, Committee Challenges (01/08/2007)

To be honest, I'm not opposed to some targeted cuts in the state income tax to help Nebraska's middle-class families. They are taxed at the same rate as Pete Ricketts in one of the flattest and least progressive systems in the country. If Gov. Dave Heineman were to use his soon-to-be-released biennial budget proposal to push for reforms correcting this failure of principle and common sense, I would be hard-pressed to find fault with it.

But, I fear Heineman is far more likely to use any such reasonable, even necessary changes to do little more than mask a fuller agenda of tax cuts for our state's wealthiest, most privileged, and most powerful.

The middle-class will not be helped by an across-the-board cut of the income tax. Nor will they be helped by ending the state's ability to collect estate taxes. Yet, Heineman is almost certain to couch one or both of these proposals in his budget under the guise of middle-class tax relief, even though they'd result in fewer services with lower quality, only benefitting the economic elite who would be paying less for inferior services of which they already do not take advantage.

Still, I don't want to pre-judge Heineman's proposal before any numbers have even been revealed. So far, all we've gotten is rhetoric and his plan can only be scrutinized as such. The budgeting process is always one of priorities, and - to truly understand those priorities - you have to consider the dollars and cents absent the all too deceptive words of a crafty politician.

As rhetoric alone, though, one is obligated to challenge the simple lie at the heart of Heineman's attempts to advance his plan by persuading legislators to give-up their hopes of reducing property taxes.

The degree to which the Nebraska media, especially the Omaha World-Herald, has adopted Heineman's talk of property tax relief as nothing more than "a tax shift" rather than a true tax cut is downright unforgiveable. For months now, Heineman's rhetoric has gone completely unchallenged in this regard, though it lacks intellectual merit and any basis in the rational world.

First floated this summer to undermine Democratic gubernatorial challenger David Hahn's proposal for comprehensive property tax relief, Heineman's "tax shift" jive was effective against Hahn, largely because he was an underfunded candidate with no means to get his message out. The fact that there are no journalists in this state worth a damn, willing to scrutinize Heineman's rhetoric and to expose its total failure certainly didn't help either.

Heineman thinks he can now play the same game with the state legislature, bullying 22 new senators who were elected having made promises to pursue property tax relief. Here, Heineman's agenda does not mesh with the legislature's. Nor, I would suggest, does Heineman's agenda mesh with that of the people of Nebraska....except for the fact that they elected him and this was all perfectly foreseeable.

Of course, how can people be expected to vote their interests and to vote rationally when the media they trust to keep them informed and to hold politicians accountable has so lost its way? That the World-Herald and others have actually adopted Heineman's bullshit arguments of property tax relief being a "tax shift" without even pretending independence and integrity is a strong indicator of how this state ever got to the dangerous crossroads at which it now stands.

Because the state does not collect property taxes, it's easy to say they're beyond the state's control...or, at least, the state's responsibility. But, in truth, it's irresponsible for the state to exploit the artificial distinctions on which such thinking depends when the state is the only entity with the means to adequately address the people's cries for relief from this most burdensome of taxes.

Much of the revenue from property taxes is collected by local government to pay for public education, a right afforded citizens under Nebraska's constitution. With that in mind, it's just plain absurd and intellectually insulting to disregard the state's responsibility in the name of political convenience. Yet, that's precisely what Heineman and the media are asking the legislature to do.

No government expenditure and no form of revenue exists in a bubble. Any tax cut has the potential of being a tax shift because it can create a new burden that will have to be taken care of by someone else. While the state does not have immediate control over property taxes, it is - without a doubt - the government entity best situated to comprehensively tackle the underlying problems fueling so much public discontent. It's only a question of finding the will to do so, offering the kind of leadership that isn't afraid to take responsibility and to say the buck stops here.

Heineman doesn't want the buck on property taxes to stop at his desk. It doesn't fit his agenda, and he's found a cheap message about "tax shifts" he thinks he can manipulate to get his way. With the media's eager complicity, he might even be right, but don't forget for a second the total lack of leadership such a message represents.

Heineman doesn't want to have to make tough choices on education - whether raising revenue or making cuts. He just wants to be able to offer lip service support for quality education with as little liability as possible. Yet, by doing so, he leaves local governments entirely at the mercy of rising health costs, energy bills, and salary demands over which they have no real control, hence the ever-spiraling property taxes until the state intervenes and assumes some of the burden for factors over which it has a constitutional responsibility and could alone exercise some actual leverage.

State senators will have to be strong if they're to hold-out against the combined forces of Heineman and the World-Herald's irresponsibility and deception. That seems unlikely with Mike Flood at the helm, but it certainly provides the young Speaker of the Legislature an opportunity to prove his worth. Any true property tax relief that might result would be an outcome for which the people of Nebraska would long be grateful - whether it's a "tax shift" or not.

Ultimately, if the income tax really is more burdensome to Nebraskans or more inhibitive to the state's growth, then Heineman is right to focus his attentions as he has. But just because reforming property taxes is not the easiest of endeavors does not erase Heineman's responsibilities as Governor or the public's desires.

In his Inaugural address last week, Heineman called for "honest resolve" in the debate about reforming our tax structure. That's all I ask for as well. Heineman's "tax shift" rhetoric, though, puts a premium on his personal resolve to reduce income taxes (and, shamefully, eliminate the estate/aristocracy tax) at great expense to his honesty and credibility.

We deserve better, as does Nebraska and its future.

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Anonymous Jon Rehm said...

Careful the mainstream media may brand you as foul mouthed and angry. Fuck them. Anyhow I liked the reference to Adrian Smith as a "poolboy."

Seriously although the legislature looks pretty grim, there are some points of light. Sen Cornet introduced LB 175 which would erode employment at-will which is one of the most anti-worker laws on the books. Basically an employer can fire you for any reason unless you're under collective bargaining. LB 175 at least forces employers to provide an explanation and gives employees a meanigful chance to dispute the charge. It would be a big step forward for workers in this state.

Blogger Kyle Michaelis said...


Is "poolboy" one word? I haven't the foggiest.

As for LB 175 and the Legislature, thanks for keeping us informed about these sorts of bills. Please consider this an open invitation to write a full article for publication on this or any progressive legislative and/or legal issues that should arise in our fair state.

Anonymous Elisia Harvey said...

Economics is not my strong suit, so I'm not going to claim expertise on tax policy, tax cuts, and tax shifts. I can only offer anecdotal evidence.

First time home buyers (as my husband and I were 3 years ago) find that while they can usually afford a mortgage comparable with what they pay in rent, when you factor in property taxes, the monthly payment skyrockets. So while house prices may look affordable, the cost per month is significantly higher than one might think. This means many potential buyers put off buying a home or have to greatly lower the price range of the home they buy to afford the monthly payment. When you have to factor in property taxes, affordable housing can be difficult to find.

One could argue that lowering state income taxes would mean more take-home pay each month, but I'm guessing the extra money wouldn't even come close to putting a dent into what we pay each month on property taxes, especially in the income bracket we're in.

A family member of mine in Colorado owns a large house on quite a few acres with several buildings, and he pays less than half of the property taxes we do on our old house on a small lot in a dinky town. Yet somehow his community pays for their schools and other services funded by property taxes. I must say, I'm vexed by that!


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