The Price of Corporate Welfare: High Property Taxes
The Republicans have controlled the Nebraska state government since 1999 and they have promised in every election cycle to cut property taxes. However, they have broken that promise and property taxes are now higher than ever. At the same time, the state is broke and is running a projected $289 million deficit. Currently, the legislature is scrambling to find a way to fix this massive budget hole.
At the present time, we have the worst of both worlds — in part — due to a $3 billion income and corporate tax cut that Governor Jim Pillen jammed through the legislature in 2023. In typical GOP fashion, the Pillen tax scheme heavily favored the wealthy. According to the Open Sky Institute, the top 20% of Nebraska income earners grabbed 75% of the income tax benefits. The bottom 20% received tax cuts averaging a measly $5. In addition, 83% of the corporate tax cut will be hoovered up by out of state corporations.
The whopping price tag of Pillen’s tax cuts concerned fiscally conservative senators, both past and present at the time of its passage in 2023. Former moderate Republican state senators Curt Friesen and Paul Schumacher had serious doubts as to whether this loss of revenue was sustainable.
These concerns were shared by two prescient Democratic senators during the 2023 session. “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.”
Another significant factor causing Nebraska’s high property taxes and budget deficit is one of the most generous corporate welfare programs in America. The legislature passed the Nebraska Advantage Act in 2005 and the ImagiNE Nebraska Incentive Act in 2020. Those programs have showered billions of dollars in taxpayer money on corporation in the hopes that they will create jobs.
The legislature has studied these programs and have concluded that many of the jobs that were created by the recipients of the taxpayer largesse would have been created in the absence of the free stuff. One study indicated that Nebraska taxpayers shelled out $250,000 for the creation of each job. Conagra Corporation hoovered up $160 million in corporate welfare and left the state for Illinois in 2015.
The chickens are now coming home to roost. In a bombshell report, State Auditor Mike Foley warned that over the next four fiscal years, a staggering $1.5 billion will be spent on corporate tax incentives. Foley wrote: “When you combine over $1.5 billion in business tax incentives to be used over the next four fiscal years plus potentially hundreds of millions of dollars more in uncollected tax proceeds, the result is a staggering loss of revenue to the state — all of which must be counterbalanced in some way.”
Foley identified “serious deficiencies” in state procedures that check on businesses grabbing taxpayer handouts. He said the Department of Revenue is required to conduct an initial qualification audit and, after that, periodic audits to verify the information. The Auditor reported that 14 of 20 corporations reviewed lacked a timely qualification audit and 17 of those 20 never had a follow up audit.
In conclusion, Foley indicated that that the Nebraska Advantage and ImagiNE Acts appear to contain some “operational inadequacies” that could result in the legislation becoming a “drain” as opposed to a “boon” to the state economy.
Sen. George Dungan of Lincoln, a member of the Revenue Committee, said Foley’s letter reflects the reality that the Legislature can’t continue to support “corporate giveaways” when lawmakers have also cut the corporate tax rate to 3.99% in 2023.
Without a change in direction, Dungan said he believes Nebraska will follow on the same path as Kansas, which faced a serious budget crisis in the 2010s due to huge income tax cuts for the wealthy. The supporters of the Kansas tax cuts predicted an economic boom that never materialized. Instead, the legislature had to make significant cuts to infrastructure, universities and schools to pay for the tax cuts. Eventually most of the tax cuts were repealed on a bi-partisan basis.
Dungan expressed unease over the senators’ continued emphasis on hiking sales and use taxes as a way to reduce the deficit, contending that it reveals how out of touch senators are with everyday Nebraskans. “If you start to expand what you spend sales tax on, or if you start to implement more taxes on services, everyday people are going to feel it,” Dungan said.
Nebraska’s biggest problems are a labor shortage and a brain drain. Nebraska’s “brain drain” — the net loss of college-educated people through migration to other states — has more than quadrupled in the last decade. We are not going to solve these problems by maintaining these failed tax cuts for the wealthy and corporations.
We have a big opportunity in the 2026 legislative elections. Trump and the Republican Party are sinking like a stone in the polls since they are wrecking the country. I expect numerous good candidates to run for legislature since there will be a huge backlash to the MAGA agenda. History shows that the party holding the White House gets blown out in the mid-term elections.
Be confident going forward. Take nothing for granted. Keep working hard. If we do the work, we will win!
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