Governor’s tax ideas die, but might live another day

Governor’s tax ideas die, but might live another day

By Paul Hammel February 20, 2013 1:53 pm Comments

 Gov. Dave Heineman’s two tax reform bills will die a quiet death on Wednesday afternoon.

 The governor rightly read the tea leaves and asked over the weekend that they be removed from discussion. The bills were going to die anyway.

 But what lives on is a real, and a real serious, discussion about reforming the state’s tax system.

 It’s not a total defeat for the Republican governor — a retreat of major proportions, yes — but not a total defeat. He started a debate, and just might get some tax changes he likes, after a committee of state lawmakers studies taxes over the next nine months and offers suggestions for changes.

  But indications are the conversation is headed for some changes the governor didn’t support when he first unveiled his hard-charging agenda to eliminate all state income taxes. Look for lots of talk about expanding the tax base to include sales taxes on services that aren’t on the tax rolls now, and an attempt at lowering local property taxes — two things Heineman didn’t include in his original plans.

  There will be a look at the ever-expanding list of sales tax exemptions for businesses and agriculture. But, as the governor discovered over the past month, there’s a avalanche of opposition to doing that. Even the small exemptions, like biochips and bull semen, are hard to eliminate, because some business can come in and say “I’m moving my jobs out of state.”

 What’s still puzzling is why the governor didn’t come into the 2013 session more organized, and with his traditional allies at his side, the business and ag communities. Instead, he threw a bomb down the legislative aisle in calling for the elimination of about $2.4 billion in exemptions. He also didn’t explain why he targeted those exemptions.

 That blew up in his face, just as it had for former State Sen. Rich Pahls in recent years when he’d rise from his seat and tell us how wrong it was that Nebraska offered more than $4 billion in tax exemptions. But then, he’d offer no solution.

  But the Legislature now seems intent on a real study of the state tax system. And we’re likely to see some real solutions.