Let’s gather around table, have some leftovers
The Legislature convenes in a few months. It’s a long session in a non-election year, traditionally the best time to talk about that 800-pound elephant in the room, taxes.
Yes, we’re having leftovers, but everything is on the table. Or should be, to deal with the problem of property taxes. And, the entire Legislature should join the newly minted Revenue Committee at the table. The governor and lobbyists should respectfully await their turns.
The state’s two largest think tanks have already weighed in. As expected, the conservative Platte Institute says the problem is sales tax exemptions.
Director Jim Vokal of Omaha said those exemptions already cost the state $4.8 billion a year. Removing some of them would bring in more revenue for property tax relief.
Meanwhile, the folks at Open Sky propose tweaks to tax incentives and credits.
In 2017, businesses received $360 million in tax abatements from 11 state incentive programs that were supposed to create new jobs and spur economic activity.
Open Sky says the state’s largest business tax incentive program—The Nebraska Advantage Act—was created in 2005 to allow businesses to earn income tax credits and exemptions against sales and personal property taxes by increasing investment and/or employment in Nebraska.
The act sunsets in 2020, but the ramifications could continue for decades.
The effectiveness of the program has been hard to determine. In 2016, the Legislature’s Performance Audit Committee found it cost the state between $24,000 and $320,000 to create a single job under The Nebraska Advantage Act. When the incentive was proposed, it was initially projected to cost between $24 million and $60 million annually. But, in 2017 that number was $160 million.
The Department of Revenue projects that even when economic job growth caused by the program is factored in, Nebraska Advantage will result in a cumulative net revenue loss of $996.5 million by 2027.
National employment research expert Dr. Timothy Bartik found business tax breaks have little correlation with employment or future economic growth, can be excessively costly,
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