Jim Pillen’s Risky Tax Scheme
When Republicans control the government, they emphasize both their toxic culture wars and tax cuts for the rich. They have to reward their entire coalition for their past support. Jim Pillen’s first legislative session as governor should come as no surprise to people who have been paying attention.
At the present time, Pillen’s massive $3 billion tax cut package is one step closer to passing. Last week, the GOP tax scheme gained the necessary votes to pass in second round of voting. If the two tax bills pass as expected in the final reading stage, it will become law and will have profound consequences for all Nebraskans.
LB 243 addresses property tax taxes, and LB 754 would reduce the state’s top personal income tax rate from 6.64% to 3.99% by 2027. Corporate tax rates would be slashed from 7.25% to 3.99% by 2027.
In typical GOP fashion, the Pillen tax scheme heavily favors the wealthy. According to the Open Sky Institute, the top 20% of Nebraska income earners would grab 75% of the income tax benefits. The bottom 20% would see tax cuts averaging a measly $5. In addition, 83% of the corporate tax cut will flow out of state.
The whopping price tag has concerned fiscally conservative senators, both past and present. Former Republican state senators Curt Friesen and Paul Schumacher have serious doubts as to whether this loss of revenue is sustainable.
These worries about Nebraska’s future revenues were debated on the floor of the legislature last week. “Cutting too deep, too fast has consequences,” said Danielle Conrad, in reference to the failed Kansas tax cuts of 2012. The proponents of the Kansas tax cuts predicted an economic boom but instead massive declines in tax revenue required Kansas to cut spending on education, colleges and infrastructure. Eventually, most of the reckless tax cuts were reversed and Kansas elected a Democratic governor to clean up the mess.
“We are going down that rabbit hole knowing full well that these additional tax cuts, corporate individual, are not sustainable,” Senator Jane Raybould said. Senator Wendy DeBoer stated: “We are giving an extraordinarily large tax cut to the wealthiest Nebraskans. And we are giving a much smaller tax cut to the middle class.”
In response to this huge give away to the wealthy and corporations, DeBoer introduced an amendment to provide more relief for the middle class. At the same time, Raybould introduced an amendment to make the tax cuts conditional upon continued strong revenue forecasts. Both amendments were rejected by the Republican majority.
The Open Sky Institute shared Raybould’s concerns about the loss of future revenues: “The significant loss in revenue could lead to cuts in important state programs, including education and workforce development, when the state faces an economic downturn.”
“It’s all fun and games to cut taxes for the wealthy until times get tough and you have to make cuts to infrastructure, education, and public safety because you don’t have any revenue.” Former State Senator Adam Morfeld.
Pillen and the Republican senators believe that rich people don’t have enough money and that the poor and middle class have it too easy. That is a core Republican belief.
The irresponsible GOP tax cuts won’t convince young people to stay in Nebraska. It’s not going to trickle down. It never does.
Nebraska is facing a crisis — our young people are leaving the state in droves. On average, 2,000 college educated young people leave Nebraska every year. Nebraska has one of the worst outmigration rankings in the country when it comes to young people leaving the state. Nebraska ranks very poorly — 40th overall.
The University of Nebraska at Omaha’s Center for Public Affairs has studied Nebraska’s brain drain crisis. Of the 20 categories of reasons they left, tax relief was not one of them.
Young people are leaving the state due to low wages and the GOP’s toxic culture wars. Nebraska’s corporate inspired so-called “ right to work” (for less) law has suppressed wages for all of our citizens.
We already seeing a backlash to Pillen’s culture wars. The GOP majority could be on the verge of banning abortion and banning medical care for transgender minors. The Omaha Chamber of Commerce has warned the legislature against passing these toxic culture war bills out of a genuine concern that the state will lose employees and convention business.
Over 115 businesses and non-profits signed a letter addressed to Pillen opposing the GOP’s bill that would ban transgender care for minors. They advised Pillen that passage of the bill would hurt job retention and recruitment in Nebraska.
Pillen’s MAGA Republican allies retaliated by making harassing and threatening phone calls to several of the businesses that signed the letter. A non-profit executive was sickened by a message that was filled with derogatory and foul language.
We are in a pretty tough spot right now. The inscription over the main entrance of the Capitol says: “The Salvation of the State is Watchfulness in the Citizen.” It’s up to us hold the state senators accountable. Keep those phone calls and emails coming! Don’t let them get away with a big turn to the radical right!