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The super wealthy are lightly taxed in Nebraska.

Why We Can’t Have Nice Things — Ricketts Reign Of Error

Last week, Governor Pete Ricketts took his show on the road and held a town hall meeting in Thedford. Not coincidentally, this venue for his town hall was about as far away as you can get from the state’s urban areas -where he is unpopular. Bob Krist carried both Douglas and Lancaster Counties in 2018. Instead, he chose Thomas County where 80% of registered voters are Republican.

Ricketts wasn’t able to escape his failed record on property taxes even though he was in the friendly confines of deep red western Nebraska. At the meeting, Ricketts was confronted by a rancher who indicated that support was swelling in the rural areas for a petition drive that would put on the 2020 ballot an initiative that would provide property owners with a state income tax credit equal to 35% of their annual property tax bill. Dr. Brent Steffen, a Kearney surgeon who owns a ranch near Thedford spoke truth to power when he said: “We need immediate relief, not over five or six or eight years. The ag sector is languishing and we’re paying, not excessive taxes, oppressive taxes.”

Ricketts responded by simply bashing his opponents in the legislature and their proposals. He barely defended his own proposal that would put a band-aid on a gaping wound. Instead, Ricketts made the tired argument that his opponents wanted to raise everybody’s taxes. The billionaire governor did correctly state that: “We didn’t get here overnight.”

What Ricketts failed to admit was that the Republicans have owned the Nebraska state government lock, stock and barrel for the last twenty years. During that two decade reign of error, the property tax crisis has metastasized. Both farmers and homeowners are being badly hurt by soaring property taxes.

One of the big factors behind Nebraska’s property tax crisis is our overly generous corporate welfare program. Every year, corporations collect anywhere from $200 million to $300 million in subsidies for supposedly creating jobs. (A 2012 study by the legislature couldn’t find a correlation between the corporate subsidies and the creation of new jobs.) An audit by the legislature indicates that Nebraska taxpayers pay anywhere from from $24,500 to a whopping $320,000 for each job that is created. NioCorp Developments recently grabbed a $200 million payment and claimed it will create 400 jobs. That means the cost of each job will be $500,000!

Another factor behind Nebraska’s high property tax rates is that the very wealthy are lightly taxed. 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.”

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. We are all subsidizing this low tax regime for the corporations and the super wealthy in the form of higher property taxes and the meltdowns at the Departments of Corrections and HHS.

The only possible solution that has come out of the legislature has been a bill from Senator Lou Anne Linehan that would fund property tax relief by eliminating some sales tax exemptions. Linehan’s proposal has some merit but it is a largely a band-aid — like Ricketts’ proposal. Even though Linehan’s proposal is revenue neutral, Ricketts opposes it and has falsely termed it a tax increase.

This ongoing failure by Ricketts and the Republicans in the legislature has led to a petition drive aimed at placing on the ballot a measure — if passed — that would grant property owners a 35% rebate and cut the Nebraska state budget by $1.5 billion or a whopping 33%. Don’t believe this can’t pass. Back in 1966, Nebraska voters passed a property tax ballot initiative that essentially wiped out its property tax system. When Norbert Tiemann took office as governor in 1967, the state government had virtually no sources of revenue.

Ricketts and his “crickets” in the legislature simply aren’t up to solving this problem. Their opposition to legalized gambling and marijuana — as well as their support for a low tax environment for the rich - has perpetuated this long standing problem. It took a long time for the property tax crisis to develop and it will take a long time to solve it. The first step is to elect more Democrats to the legislature in 2020. I would recommend that you commit your time and/or money to good legislative candidates. Elections have consequences. Let’s chase the money changers out of the temple in 2020!

I’m a trial lawyer, a Democratic activist and a sports fan.

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