Ricketts’ Dirty Little Secret — The Super Wealthy And Big Corporations Are Lightly Taxed In Nebraska
One of the many false talking points from the radical right is that the wealthy and corporations — also know as the so-called “job creators”- are excessively taxed. Right Wingers further claim, without any evidence, that this hurts the economy. Joe Ricketts has even complained that these allegedly high tax rates “punish” success and hard work.
What Ricketts and the right wing don’t tell you is that the super wealthy and big corporations in Nebraska are lightly taxed. This all began back in 1987, when the Unicameral passed a series of corporate tax incentives after Conagra threatened to leave Omaha. (Conagra left Omaha in 2015 after pocketing $160 million of the Nebraska taxpayers’ money.) As I’ve discussed here before, Nebraska spends $300 million per year on ineffectual corporate subsidies and welfare.
The sweetheart deal in the Nebraska tax code for the super wealthy was exposed by the Omaha World Herald in a piece by Matthew Hansen on January 20, 2019. In this piece, Hansen explained that due to a technical and complicated loophole in the Nebraska tax code: “ The 500 richest Nebraskans earned at least $2.2 million a year in adjusted gross income in 2014, according to the latest available Department of Revenue data. In 2016, those 500 paid an effective tax rate of 3.5 percent. That’s about the same as upper-middle-class Nebraskans pay…. So, in reality, you may not be paying as much state income tax as your boss. But you actually may be paying as big a share of your income as your boss’ boss’ boss.”
Another heretofore unknown special interest loophole in Nebraska’s tax laws allows corporations to avoid paying Nebraska taxes on money they earned elsewhere, even when the income isn’t taxed in another state. This exemption costs Nebraska taxpayers $83 million per year and was surreptitiously added to the 1987 Conagra tax bill at the eleventh hour.
Unfortunately, these special interest tax breaks aren’t free — they are very costly to middle class Nebraskans. Because Nebraska has a balanced budget requirement, any tax cut for the wealthy must be offset by corresponding tax increases or spending cuts. These tax cuts are really tax shifts.
These tax shifts have had a detrimental impact on the UNL system and its students due to Pete Ricketts’ strict adherence to the no new taxes dogma of the radical right. In 2017, UNL had to cut $30 million from its budget and lay off 100 employees. In addition, that budget raised tuition 8.6% over the next two years.
Another consequence of Nebraska’s low tax environment for the super wealthy and corporations is that Nebraska’s prisons are now at 157 percent of design capacity. As a result of Ricketts’ under funding, the Nebraska prison system has been plagued by riots caused by short staffing and over crowding. There have been two prison riots thus far in which at least four people have been killed. Moreover, inmate assaults upon correctional officers occur on a regular basis.
Another cost to Nebraskans of Ricketts’ preferred tax scheme are sky high property taxes paid by Nebraska farmers. At a recent townhall meeting in Beatrice, the billionaire governor actually faced some pushback from concerned citizens. A farmer from Firth told Ricketts that his property tax bill had soared from $2,228.00 in 2007 to $9,116.00 in 2017. Former legislative candidate and Wymore farmer Don Schuller told Ricketts that his property tax plan “ amounted to giving a morsel to a starving person.”
Ricketts’ extreme tax policies have also faced pushback in the Unicameral. Senator Tony Vargas proposed a bill that would raise taxes on the wealthy and bring in $100 million in additional tax revenue on an annual basis. Moderate Republican Senator Steve McCollister has introduced legislation that would reverse the special interest tax break that was passed in near secrecy in 1987. In addition, a bi-partisan groups of senators — that includes Patty Pansing Brooks and Adam Morfeld — have introduced a bill to revamp Nebraska’s costly and ineffectual corporate subsidies program.
I would recommend to my friends that we contact our state senators and urge them to vote for these bills that would end these special interest inspired inequities in Nebraska’s tax system. Nebraska’s experiment in government of, for and by the rich is a miserable failure. We need to get back to our nation’s founding principles. As Abraham Lincoln said in his immortal words at Gettysburg in 1863: “(T)hat this nation, under God, shall have a new birth of freedom — and that government of the people, by the people, for the people, shall not perish from the earth.”