Senator Tom Brewer
43rd District
1-24-2020

This week my good friend Sen. Steve Erdman introduced LR 300 CA. It is a proposed constitutional amendment that would completely change the tax system in Nebraska. Along with several of my colleagues I co-sponsored it immediately.

Imagine living in a state that had no form of income tax, no state sales tax, and no property tax. The only form of tax the state would have is a “consumption” tax. This is not a sales tax because a sales tax is applied to everything that is “sold.” Organizations who can afford to hire lobbyists have managed to get quite a few things exempt from our state sales tax over the years. A consumption tax removes this political favoritism because it would be applied to “all” new goods and all services. Only the first owner of a new good pays the consumption tax. Used goods are not taxed.

Nothing is exempt from the consumption tax except “business inputs.” A farmer’s seed and fertilizer are not taxed. A new tractor is not taxed. The metal a manufacturing business purchased to make a rail car or an irrigation system isn’t taxed, only the purchase of the final product is subject to the tax.

This consumption tax proposal would completely un-tax low income people. The amount of tax that would be paid on all spending up to the poverty level would be received by every adult citizen of the State in the form of a “prebate” check. This ensures no one would pay any form of tax on the basic necessities of life.

If we replaced our current tax system with this consumption tax, and we wanted to remain “revenue neutral” (collect the same total amount of tax revenue) the consumption tax rate would be set at about 10% on all new goods and services. Citizens would decide how much they would like to pay in taxes based on their personal spending decisions. The less they spend, the less tax they pay.

Sen. Erdman said we would have to build a wall around Nebraska to keep people and businesses from flocking into our State. Instead of steadily losing population in all but three of our counties, Nebraska would grow. Instead of our young people leaving after college, opportunities would abound. How does any state in the nation, let alone our neighbors, compete with “zero income, zero sales, and zero property tax?” Nebraska would take off like a rocket.

A growing number of senators are really excited about this idea, there is even talk of holding a special session of the legislature to make this a reality. This is one of the best ideas I have seen since I came to the legislature. It takes 25 votes in the legislature to get this on the ballot for the people to decide next November. I hope people call and encourage their State senator to support LR 300 CA.

Please contact my office with any comments, questions or concerns. Email me at; tbrewer@leg.ne.gov. Mail a letter to; Sen. Tom Brewer, Room #1101, P.O. Box 94604, Lincoln, NE 68509 or call us at (402) 471-2628.