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Sen. John Kuehn

Sen. John Kuehn

District 38

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Letter to the District 26

June 30th, 2016

Nebraska’s status as a comparatively high tax tax state makes tax relief a top legislative priority.  Proposing changes to any tax quickly becomes a case study in the influence of special interests and political rhetoric. Many proposals are sold to voters as “tax relief” that will not actually decrease your total tax bill.

Tax relief clearly means total tax collections decrease or are revenue neutral. It does not mean shifting revenue to a less transparent tax, exempting a special interest so others pick up the bill, filling revenue gaps with state cash reserves, or pumping more state collected dollars into local governments without equivalent reductions. Such proposals are little more than a shill game, hoping that taxpayers will not realize they are paying more taxes, but in different forms. These complicated tax policy changes favor influential special interests at the expense of Nebraska’s families, small businesses, and ag producers.

Spending control is a mandatory prerequisite for tax relief. Limiting the growth of government budgets is the only method to limit the dollars taken out of your pocket. Drastic cuts to budgets and services are not necessary, but careful prioritization and responsible spending decisions can limit growth of local and state budgets to 3.5-4% annually. Spending growth that outpaces the economic growth of taxpayer’s wages is unsustainable on its merit. It is mathematically impossible to reduce Nebraska taxpayer’s burden if government spending continues to grow at its current rapid pace.

Simply shifting the funding source in the absence of spending limits does not work. Additional state dollars appropriated to the Property Tax Credit fund have not stemmed the rapid growth of property taxes. Additional state dollars allocated to TEEOSA, the school equalization aid formula, has failed to reduce either the property tax collections or the increases in spending by public schools. Each time state revenue was added to TEEOSA, property tax collections reached new highs within a matter of a few years. Increased state spending for natural resources projects, workforce development, and infrastructure has not dampened spending growth by NRDs, community colleges, or communities. To the contrary, their spending growth has reached record highs. Allocating more state dollars, to the tune of several hundred million suggested by some groups, does not provide tax relief. It merely hides the pea under a different cup.

Current proposals for tax relief primarily focus on shifting funding for various aspects of government to different sources. Increasing sales tax revenue has emerged as a common concept. Charging sales taxes for services in addition to goods, reducing the number of items that are exempt from sales tax, adding sales taxes to food, and increasing sales tax rates are being discussed. The stated intention would be to use increased sales tax revenue to offset property taxes or income taxes.

I will not support increases to one tax without mandatory dollar for dollar reduction in another tax and a reduction in the overall tax burden. Any shifts of funding sources must come with reasonable restrictions on spending growth. Also, sales tax shifts must not put small community businesses at a competitive disadvantage. Finally, transparency of the taxes collected and clear accountability for spending decisions is required for my support.

Nebraska ranks as a high tax state in large part because local governments refuse to cap their growth in spending. Any tax shift must accomplish real tax relief by reducing the overall tax burden on Nebraska taxpayers in a transparent and accountable manner.

Sen. John Kuehn

District 38
Room #12th Floor
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2732
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