Why Heineman's Tax Plan is Just Plain Wrong

A few weeks ago, I mentioned that some semblance of balance had finally been attempted by the media as both the Omaha World-Herald and the Lincoln Journal-Star reported on the very real shortfalls of Gov. Heineman's proposal to shift the tax burden onto the working class and the poor. The World-Herald's article was particularly relevant because it also delved into the raw numbers that show Nebraska's tax problem is a property tax problem - one the people will not forget and the state can no longer ignore.

The World-Herald reported (it's not always I can write that with a straight face, but here deserved):

Supporters of a broad income tax cut being pushed by Gov. Dave Heineman say it's a simple way to get significant change for nearly all taxpayers.

The governor's plan, Legislative Bill 331, also would deal with what business leaders long have argued is one of the biggest impediments to job growth: an income tax rate on top earners that is among the highest in the nation...Nebraska's current top rate, 6.84 percent, is the 17th-highest in the country....

National tax comparisons do show that the state's property tax rate stands out more than income taxes. Nebraska also is one of about a dozen states that don't have an exemption, credit or lower rate for property taxes for the typical homeowner....

Sen. Ron Raikes of Lincoln, a veteran member of the Legislature's Revenue Committee, defended the way Nebraska treats higher incomes. The other primary taxes that fund state and local government - property and sales taxes - take a bigger amount, percentagewise, from modest earners' paychecks.

"Income tax is the only progressive tax we have," he said....

Overall, national rankings do suggest Nebraska's property taxes are more out of step than its income taxes....

[T]he state's property taxes rated 18th nationally and income taxes ranked 29th. Income was the one tax area that was in the bottom half, with sales taxes (18th) and automobile taxes (10th) also ranking high.

Even at the $150,000 income level, the study put Nebraska's income taxes 23rd - still below the state's property tax rank.

So, let's just get a few things straight about where Nebraska stands in terms of high taxes:

Automobile Taxes - 10th
Sales Taxes - 18th
Property Taxes - 18th
Income Taxes (at $150,000) - 23rd
Income Taxes (generally) - 29th

And, here is a nice look at what percentage of the state's total taxes come from what source (courtesy of the Legislature's Revenue Committee):
With numbers like these, Heineman's focus on income taxes clearly doesn't make much objective sense - except for the fact that he is a Republican and benefitting the rich is generally what Republicans do.

The income tax is our least burdensome tax (in national rankings) and our only progressive tax (in asking more of the wealthy). While the system could certainly use some tweaking, it has no place being Gov. Heineman's main priority because it is not the people's priority. Nebraskans want property tax relief, and the facts are on their side.

As the illustration shows above, the people of Nebraska pay more than 20% more in property taxes than they do in income taxes. The property tax is regressive. It undermines our communities and our stake in home ownership. And, we are actually out-of-touch in our treatment of property taxes as one of the only states that does not provide some sort of credit or exemption on a taxpayer's home.

The facts speak for themselves. And, the people have spoken as well. So far, Gov. Heineman has refused to listen. We can only hope that the state legislature will respect the voters who elected them enough to speak with one voice - loud and clear - rejecting Heineman's agenda and demanding that the state focus on property tax relief.