Platte Institute: Overhauled Nebraska tax system could drive more jobs -
Published Friday, October 4, 2013 at 12:00 am / Updated at 4:29 am
Platte Institute: Overhauled Nebraska tax system could drive more jobs

LINCOLN — An Omaha-based think tank put some meat Thursday on a thin tax relief debate, releasing a plan it said would turn Nebraska's “middle of the pack” tax system into one that would inspire economic growth.

The Platte Institute for Economic Research provided the most detailed plan to date on changes to state taxes, calling for income tax cuts, tougher limits on property taxes and taxation of more services.

The group's report presented three options.

One would swap lower individual and corporate income taxes with about $126 million in new sales taxes on currently exempt services such as automobile repairs, haircuts, veterinary bills, funerals and dues for clubs, organizations and labor unions.

In the past, the Platte Institute has called for reduced government spending to finance tax cuts. But its executive director said the organization wanted to provide an array of options, including one that would be nearly revenue-neutral and would require only $4 million in spending cuts.

“We wanted a reasonable plan that will have the greatest chance to pass, with income-tax relief the primary goal,” said executive director Jim Vokal, a former Omaha city councilman.

The report comes as the Nebraska Legislature is midway through gathering public comment on how to make the state tax system more equitable and more reflective of today's economy. Recommendations from lawmakers aren't due until December.

Gov. Dave Heineman weighed in earlier this week, calling for cuts in both state income taxes and local property taxes. But he said it was too soon to offer details.

Citizens at the hearings held by the Legislature's Tax Modernization Committee have mostly called for property tax reductions, as has the Lincoln-based Open Sky Policy Institute, but few specifics have been suggested.

The Nebraska Chamber of Commerce and Industry has passed out some tax goals that look similar to the Platte Institute's plan, but Thursday's proposal went further, suggesting exactly which sales tax exemptions should go away to fund a tax shift.

Three state senators who attended a press conference to release the report balked when asked whether they supported enacting new sales taxes to finance a cut in income taxes.

State Sen. Charlie Janssen of Fremont, a Republican candidate for governor, and Sen. Pete Pirsch of Omaha, who is expected to announce his GOP candidacy for state auditor, both said they want tax relief, not new taxes. Sen. Bill Kintner of Papillion agreed, but said lawmakers will take a look at the report.

“This is needed,” Kintner said, holding up the plan. “It's a framework for where we need to go.”

The report was written by Joe Henchman and Scott Drenkard of the Tax Foundation and based on meetings across the state. The Tax Foundation has ranked Nebraska's tax climate for business as No. 31 in the country, which Heineman has called “mediocre.”

The Platte Institute was founded by Omaha businessman Pete Ricketts, also a GOP candidate for governor. Ricketts has resigned as president of the group to devote time to the governor's race. He did not attend the press conference.

The two more ambitious tax-­cutting options would enact new sales taxes on an array of professional services — such as legal, financial and medical services — to raise more than $1 billion and allow income taxes to be slashed or eliminated. Heineman proposed a somewhat similar tax swap earlier this year but met a deluge of opposition.

The Platte Institute's report concluded that despite the state's low unemployment rate and high rankings for quality of life, a more “equitable and simplified” tax system would attract more jobs to the state and overcome the perception that Nebraska is not an “exciting and productive” place to live and work.

Vokal said the current tax system was “middle of the pack,” and even worse when compared with neighboring states.

The least ambitious plan would:

» Cut the state's top personal income and corporate income tax rates to 5.5 percent to make Nebraska more competitive with neighboring states. Right now, Nebraska's top personal income tax rate of 6.84 percent is the highest among neighboring states except for Iowa.

The report said that Nebraska was “extreme” in its awarding of tax incentives for businesses and that cutting the overall tax rate would be fairer, helping existing businesses as well as new ones.

» Double the earned income tax credit and increase the personal exemption, in an attempt to ensure that the tax burden is not shifted onto lower-income taxpayers.

» Strengthen limits on local property taxes. Current property tax lids are too easy to exceed, Vokal said.

» Expand the sales tax base by taxing currently exempt services such as auto repairs, beauty shop visits, and funeral and burial services. Caskets and headstones are already taxed.

The tax on funerals came with some irony. The Platte Institute, in past reports, has called for an end to inheritance taxes in Nebraska, or as some people call them, “death taxes.”

Dropping inheritance taxes was not included in the report, but Vokal said the Platte Institute still supports it. The group also favors income tax cuts for retirees, he said, though that wasn't in the report either.

Funeral director Tiff Varney of Arnold, Neb., said taxing funeral services didn't seem fair.
“If you're going to tax services, you should tax them all, lawyers and everyone,” Varney said. “You can't play favorites.”

Another Nebraska think tank, the Open Sky Policy Institute in Lincoln, has said there's no proof that income tax cuts lead to economic growth. Open Sky has said the state should focus on lowering local property taxes by increasing the state aid it sends to public schools, cities and counties.

* * * *

More Legislature coverage, resources

Meet your senators
• Map: Find your senator
More Legislature coverage
The State Line: World-Herald Legislature blog

Contact the writer: Paul Hammel    |   402-473-9584    |  

Paul covers state government and affiliated issues and helps coordinate the same.

City Council OKs redevelopment plan for north downtown project
Inmate accused of partially tearing off another's testicles charged with assault
Police question suspected burglar; 12-year-old was home alone
Crew working to disassemble International Nutrition plant
Lawyer: Man had right to hand out religious fliers outside Pinnacle Bank Arena
Firefighters put out duplex blaze in N.W. Omaha
Woodmen request would take nearly $40M in valuation from tax rolls
Coffee with a Cop set for Thursday in Benson
In TV ad, Shane Osborn says Ben Sasse 'beholden to Washington'
Douglas County offices accepting credit, debit cards
Teen killed in shooting at Benson's Gallagher Park
Ben Sasse raises more money than U.S. Senate foes Shane Osborn and Sid Dinsdale
Parched Omaha soil soaks up record precipitation
Engineering student harnesses girl power, starts engineering-science club at Gomez Elementary
WB Dodge Street lane closed
Ex-Omaha Mayor Hal Daub endorses Shane Osborn for U.S. Senate seat
New Doane College program promises free tuition for first class
No more last-minute hiring of Omaha Public Schools teachers
Database: How much did Medicare pay your doctor?
New public employee pay data: Douglas, Lancaster, Sarpy Counties, plus utilities
Lunar eclipse was visible in the Omaha area
2 arrested in west Omaha hotel TV thefts
You can tape a cable TV access show at new city-built studio in Omaha
Nancy's Almanac, April 15, 2014: Where did snow, rain fall?
Bellevue man gets 25 years in Mills County sex abuse case
< >
Breaking Brad: What do the moon, Colorado senators have in common?
How about that "blood red" moon Monday? It was as red as the eyes of a Colorado legislator.
Breaking Brad: Hey, Republicans, are you ready to be audited?
A quick list of audit red flags: 3) You fail to sign your return. 2) You fail to report income. 1) You are a registered Republican.
Breaking Brad: Next year, Bo Pelini brings a mountain lion to the spring game
Before the spring game, Bo Pelini carried a cat onto the field. With Bo's personality, it'd have been more appropriate for him to carry a mountain lion.
Breaking Brad: Bo Pelini's cat lets spring game intro go to its head
Coach Bo Pelini took the field before the spring game holding a cat aloft. Typical cat. He was undoubtedly thinking, “Sixty thousand people, all cheering for me!”
Kelly: 3 former Nebraskans all take seats at the table of international diplomacy
Three former residents of the Cornhusker State are working together at the U.S. Embassy in Paris, and one took part in a recent high-level meeting about Ukraine.
Deadline Deal thumbnail
$25 for a $50 gift card to use at Schweser's!
Buy Now
< >
Omaha World-Herald Contests
Enter for a chance to win great prizes.
OWH Store: Buy photos, books and articles
Buy photos, books and articles
Travel Snaps Photo
Going on Vacation? Take the Omaha World-Herald with you and you could the next Travel Snaps winner.
Click here to donate to Goodfellows
The 2011 Goodfellows fund drive provided holiday meals to nearly 5,000 families and their children, and raised more than $500,000 to help families in crisis year round.
Want to get World-Herald stories sent directly to your home or work computer? Sign up for's News Alerts and you will receive e-mails with the day's top stories.
Can't find what you need? Click here for site map »