Study Reports Higher Taxes for Most Nebraskans if the Income Tax is Eliminated

OMAHA (KPTM)- A research group said two state bills (LB 405, LB 406) that would cut income taxes would actually raise other taxes for most Nebraskans.

The 'Open Sky Policy Institute' in Lincoln said people making over $91,000 would save around $4,800 in taxes.

It said everyone else making less than that, around 80 percent of the state, would pay an average of $600 more.

Local business owners said the bills would hurt their bottom line and could cost jobs.

Mark Wanning has worked for 'Edward J Heck and Sons Company' for 33 years. "I was teaching school before this," said Wanning.

The company has been in business for 67 years. One part of their business is cutting and bending steel for commercial grain grinders. "Agriculture is our main business," said Wanning.

Wanning doesn't pay tax on the steel. It's part of a tax exemption on several things dealing with farming.

Nebraska Governor Dave Heineman wants to cut 27-sales tax exemptions. "Business leaders tell me, I'm for the elimination of the income tax, but you have to keep my special interest exemption. You can't have your cake and ice cream both on this one," said Heineman.

Currently, Nebraska gives about five billion dollars in tax exemptions. The state government collects around four billion in taxes, meaning Nebraska exempts more than it collects. That's one of the reasons Heineman introduced the two bills. "Why don't we eliminate all the exemptions? Why are some businesses favored over another," said Heineman.

"That would put us way out of competition with somebody right I Iowa that does the same thing we do," said Wanning.

The Governors office did tell Fox 42 that it isn't tied to any one specific exemption.

"We ought to have this conversation about our overall and comprehensive tax system, in this case, about once every 50 years," said Heineman.

Wanning said he hopes the state just sticks to its current tax plan.

"It'd be the scariest change, I'll tell you that," said Wanning.

Lawmakers will debate the two bills later this week.