Politics aplenty in Legislature’s tax debate

Politics aplenty in Legislature’s tax debate

By Paul Hammel March 19, 2013 9:52 am Comments

Let’s make one thing clear: the Nebraska Legislature hasn’t even started debating what changes to make in the state’s tax system. They’re just talking about a study of the tax system right now.

 But already, politics is creeping into the discussion of LB 613, the bill to authorize the study.

 To wit:

 – Fullerton Sen. Annette Dubas introduced the annual bill to provide a sales tax exemption on ag machinery repair parts, a proposal that gets shot down year after year. She didn’t expect it to advance. But, in a major surprise, it did.

 So now Dubas is in the awkward position of pushing a bill (since prioritized by North Platte Sen. Tom Hansen) that will compete for dollars with her own priority bill, one that will increase reimbursements for foster parents. 

 On Monday, Omaha Sen. Beau McCoy said that Dubas had put a “hold” on the ag-parts bill so that it would not come up for debate. Not true, said Dubas, as well as the Speaker of the Legislature, Sen. Greg Adams. Though it is true that Dubas does have a say, as the prime sponsor of the exemption, when the bill comes up.

 – McCoy was in Washington, D.C., over the weekend, getting a political plum — a chance to speak at the annual meeting of the Conservative Political Action Conference. McCoy, who was named one of CPAC’s ”Ten conservatives under 40,” indicated that he wanted to be governor someday.

 Rightly or wrongly, when someone openly states an ambition for higher office, every legislative move they make after that is analyzed for its influence on that ambition. McCoy, of course, chose the tax study bill as his personal priority.

 – When it comes to political ambition, Fremont Sen. Charlie Janssen is in the spotlight, too. He’s announced his run for the GOP nomination for governor in 2014, when Gov. Dave Heineman leaves office.

 Janssen already got a dart, along with McCoy, for pushing for a vote this year on providing income tax breaks on Social Security and military pension checks.

 Several senators assumed that the tax study would look at whether it was wise to offer the tax break for retirees, as well as the tax break on farm machinery parts. Then the Legislature would vote on it next year. Not this year. That difference of opinion is churning up major friction among lawmakers.

 – Heineman, who observers believe appears more likely than not to run for U.S. Senate in 2014, is one of the state’s best politicians, and he’s already played a couple of cards in the tax debate. He’s criticized a bill to offer a tax break for wind farms, one that just happens to be sponsored by Omaha Sen. Steve Lathrop, a possible Democratic candidate for governor and one of the governor’s top critics.

 Heineman also said he’d like to see a vote on the tax breaks for seniors and military vets this year — a politically popular position. He wants the priority to be on helping citizens rather than “out-of-state” companies, like a Kansas firm eyeing a new wind farm in northeast Nebraska, if they get a tax break.

 – And don’t forget Omaha Sen. Ernie Chambers. He is expressing anger that his tax proposal — to rescind a law adopted last year to allow cities an extra half-cent of sales taxes — wasn’t advanced by the Revenue Committee.

 But his venom is based on his view of taxation. Chambers hates sales taxes, because, he says, it taxes “the poorest widow” at the same rate as “the richest magnate.” 

 ”Something is wrong with society” when that’s the case, Chambers said.

   The tax study is clearly headed toward an expansion of the sales tax base, either by taxing more services or removing some out-dated exemptions. More sales taxes means property taxes or income taxes, or both, could be reduced.

 Bottom line: this week’s debate on a tax study is just a mild, political prelude to debates coming next year over actual reform of state taxes. And next year is an election year.