Gov. Dave Heineman's State of the Stateaddress focused on the need for tax reform to benefit working andretired Nebraskans and grow the state's economy by helping small businessesprosper.
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 forentrepreneurial growth and high paying jobs."
Senators Ashford and McCoy are introducing two bills onbehalf of the governor. The first bill eliminates approximately $2.4billion in sales tax exemptions which would allow for the total elimination of boththe individual income tax and the corporate income tax.
A second bill aims to eliminate approximately $395 millionin sales tax exemptions. This bill would eliminate just the corporate incometax 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 opportunitiesand challenges regarding tax reform," said Gov. Heineman. "When more sales taxexemptions are eliminated, we have a better opportunity to eliminate theindividual income tax and the corporate income tax. The challenge is equallyclear. When more exemptions are retained, that will prevent both the individualincome 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 onlycollecting $1.5 billion.