Governor's Tax Plan Could Be Tough Sell with Farmers


Coming off a record dry year, drought is a major concern as farmers plan for 2013. Farmers learned more over coffee and donuts, and a University of Nebraska Extension workshop in Aurora.

Drought is a big worry, and so is the economy. So when Governor Dave Heineman says he wants tax reform, farmers like Curt Friesen listen.

"I'm very excited to take a look at those things," the Hamilton County farmer said.

But what worries Friesen is the governor's plan to eliminate the income tax.

He said, "I don't mind paying income tax because that means I made some money."

Hamilton County is one of the top corn producing counties in one of the top corn producing states. With record profits, Nebraska farmers have invested in new equipment. But a new combine can cost $300,000 or more.

Now, Nebraska could undo 50 years of sales tax exemptions on everything from dorm rooms to lottery tickets that are currently tax–free.

And they could also be charging farmers for seed, fertilizer, and high dollar machinery many have invested in during years of record profits.

Friesen said, "When you look at just the cost of equipment these days. We're already having to pay property tax on purchases and you suddenly put 5.5 or 7 percent sales tax, we're talking extra large dollars."

Lawmakers suggest farmers will drive to neighboring states to buy equipment. State Sen. Tom Carlson of Holdrege says a two hour drive will be no big deal to save $7,000 in taxes.

Farmer Daryl Hunnicutt of Giltner says there needs to be give and take, but he believes there's merit to cutting the income tax.

He draws on personal experience, from a family member who moved to Texas.

He said, "It seems like states without income tax are the ones with good business climate. That's where job growth is."

And that's exactly what the governor wants farmers to remember.

Heineman said, "Don't underestimate farmers and ranchers. They're going to think this trough and they're going to think about kids and grandkids. They're willing to have the discussion."

With land selling for record prices, property taxes have soared. Farm Bureau, the state's largest farm group, thinks that should be the focus.

However, they agree with the governor's assessment that the current tax system is mediocre.

"I'm glad we're having the discussion, hope we can be part of it. Maybe once Nebraska comes up with a solution, we can transfer that to the federal level," Friesen said with a smile.

There are 84 items currently exempt from sales tax. The governor has yet to specify which ones he may target.