Gov. Dave Heineman's State of the State address focused on the need for tax reform to benefit working and retired Nebraskans and grow the state's economy by helping small businesses prosper.
The governor's tax plan includes the elimination of both individual and corporate income taxes. Gov. Heineman said, "Taxes are too high in Nebraska. High taxes impede economic growth and high taxes aren't attractive for entrepreneurial growth and high paying jobs."
Senators Ashford and McCoy are introducing two bills on behalf of the governor. The first bill eliminates approximately $2.4 billion in sales tax exemptions which would allow for the total elimination of both the individual income tax and the corporate income tax.
A second bill aims to eliminate approximately $395 million in sales tax exemptions. This bill would eliminate just the corporate income tax and exempt the first $12,000 of retirement income for married couples and $6,000 for single individuals.
Both bills keep food exempted from taxation.
"These two bills demonstrate the different opportunities and challenges regarding tax reform," said Gov. Heineman. "When more sales tax exemptions are eliminated, we have a better opportunity to eliminate the individual income tax and the corporate income tax. The challenge is equally clear. When more exemptions are retained, that will prevent both the individual income tax and the corporate income tax from being eliminated."
Nebraska currently exempts more in sales taxes then it collects. The state exempts $5 billion in sales taxes annually, while only collecting $1.5 billion.