Jim Pillen’s Risky Tax Scheme Is On The Ropes

Jim Pillen and the GOP dominated Nebraska legislature have been on a tax cutting spree. During the 2023 legislative session, the Nebraska Republicans cut taxes by a whopping $3.1 billion over the next five years. In addition, most of the tax cuts were grabbed by the rich and corporations.

The 2023 tax cuts were the sixth steepest cut in state revenue in the nation, according to the Open Sky Institute. Rebecca Firestone, OpenSky’s executive director, said the cuts in Nebraska threaten the state’s ability to tackle “real challenges” facing the state and endanger current investments in schools, health care and public safety.

Even though taxes were cut for the rich and corporations last year, none of Nebraska’s most serious problems have been solved. Educated young people are leaving the state, housing costs continue to soar and child care expenses are out of control. It’s not trickling down. No surprise.

The 2023 tax cuts have allegedly reduced local property taxes by approximately $1 billion. However, Pillen wants to cut property taxes by another $1 billion to achieve his goal of a $2 billion or a 40% reduction, overall, in property taxes.

The biggest issue for Pillen and the GOP is how are they doing to pay for another $1 billion property tax cut. Pillen’s plan calls for up a 1-cent hike in state sales taxes plus new and higher sales taxes on vaping products, cigarettes, soda pop, candy, state lottery tickets, hemp gummies, and veterinary bills for pets.

Pillen’s 1% percent sales tax increase would move Nebraska up to the ninth highest sales taxes in the country, at 6.5%. If this plan passes, Nebraska would have the highest sales tax in the region. This would devastate businesses near the border and hit the big ticket auto industry hard. It would simply be cheaper for Nebraskans to make purchases outside of our state.

Pillen’s plan isn’t a tax increase — it’s a tax shift. The Pillen plan would fund another tax cut for the rich by increasing taxes on everybody else. The OpenSky Institute projected that the top 5% of taxpayers would get a tax cut, while middle and lower families would be saddled with a tax increase.

“Overall, this tax shift makes Nebraska’s tax system more regressive,” said Rebecca Firestone, the executive director of OpenSky. “Anyone who’s a renter is not likely to see tax relief from this,” Firestone added, pointing out that OpenSky analyzed the impact on a wider range of income groups.

Pillen’s plan is so extreme that opposition comes from both the left and the right. A diverse and unlikely coalition is opposed to Pillen’s risky tax scheme.

“This is a tax increase. I don’t care how you want to spin it,” said Democratic Senator Jane Raybould. She contended that it was also regressive because low-income Nebraskans pay more in sales taxes, as a percent of their income, than the wealthy pay. Raybould argued that Pillen’s plan should should be deferred for a year, to allow the 2023 property tax relief law to go fully into effect.

Fellow Democratic Senator George Dungan said that such a “massive” change in tax policy needed additional scrutiny. “Clearly there’s enough people who have issues with it from the left and from the right and from the center. So I think they need to go back to the drawing board,” Dungan said.

The wealthiest and most powerful voices on the right have come out against Pillen’s massive sales tax increase. The Ricketts family has dominated the state of Nebraska since 2014 with its vast fortune. Former Governor and current U.S. Senator Pete Ricketts argued that the Pillen plan is “a bad idea.” “It’s a tax shift,” Ricketts said. “We ought to be looking for tax policy that relieves the tax burden on everybody rather than shifting it from one person to another person.”

Ricketts’ Americans For Prosperity (AFP) is actively campaigning against Pillen. An AFP mailer claims that the legislature is trying to pass “over $1 billion in new taxes.” Similarly, an AFP radio advertisement maintains that the legislature is “trying to pass the largest tax increase in Nebraska history.”

The State Chamber, the Omaha Chamber and the Lincoln Chamber of Commerce all oppose Pillen’s sales tax increase. They correctly claim that it isn’t a tax cut — it’s a tax shift that would increase taxes. Increasing sales taxes is bad for business in Nebraska.

Bill sponsor Senator Lou Ann Linehan asked for a pause on the debate over the bill last week. The opponents of the tax bill said that Linehan wants a pause because she lacks the 33 votes necessary to end a filibuster of the bill.

“Currently, there’s no way that they have 33. And they know that, so the pause is going to put them in a position where they don’t have time to get the bill done,” conservative State Senator Steve Erdman said.

Pillen’s radical tax scheme is on the ropes. Please call your state senator as soon as possible and tell them that you oppose the bill. Google “phone number Nebraska state senators” to get the phone number for your senator.

We are the second house. We can stop this bill. Even prominent Republicans don’t like it. We can do this! Now let’s get it done!