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On Thursday the Supreme Court of the United States (SCOTUS) revealed its decision in the case of South Dakota v. Wayfair, Inc. The high court closed a loophole in the law which has prevented states from collecting sales taxes from online venders. SCOTUS had created the problem back in 1992 when they ruled in Quill Corp. v. North Dakota that states could not collect sales taxes from a business unless the business had a substantial connection to that state. But, thanks to the high court’s ruling on Thursday, states now have the legal authority they need to pass legislation to begin collecting these monies.
I, as well as other legislators, such as Sen. Dan Watermeier of Syracuse and Sen. John McCollister of Omaha, saw this ruling coming. Therefore, they introduced LB44 and LB564 respectively, which would have required remote sellers to collect sales taxes, and I introduced LB601 which would have directed all revenues collected from these remote sellers to the Property Tax Cash Credit Fund. Unfortunately, none of these bills were passed into law.
Writing for the majority in the 5-4 ruling Supreme Court Justice Anthony M. Kennedy indicated that the 1992 Quill decision had cost states up to $33 billion annually in lost revenues. Furthermore, a recent report released by the United States Government Accountability Office noted that Nebraska could stand to generate anywhere between $69 million to $97 million dollars annually in state and local revenues through the collection of these online sales taxes. This is money which could have reduced your property taxes next year had the legislature taken appropriate action and passed either LB 44 or LB564, and my bill LB601.
Unfortunately, lawmakers and lobbyists have already begun frothing at the mouth! Because the Legislature failed to pass LB601, lawmakers and lobbyists are already salivating over all of the creative ways they can think of to spend this extra revenue flowing into the state’s coffers, even though lawmakers still need to update our laws. Make no mistake about it, in the days ahead you will continue to hear Hank Bounds whining about state funding for the University of Nebraska, and Nebraska Appleseed will never stop crying for Medicaid expansion. But none of these fine institutions needs this money as much as you do, and that is why I introduced LB601.
I reside in Morrill County. Morrill County has a population of 5,042 people, according to the 2010 Census. From 2006 – 2016 we saw our countywide property taxes increase more than $1 million per year. That is a ten year increase of more than $2,000 per person or an increase of more than $8,000 for a family of four. These kinds of trends are not sustainable. Because of these increases in our property taxes, farmers have begun selling their farms and moving to other states. Agriculture is the engine which drives the economy of our state. Perhaps, that is why Governor Ricketts announced after the ruling that “Any increased revenue attributable to total enforcement of our sales tax laws must be steered towards property tax relief.” I wholeheartedly agree!