Nebraska’s tax system is completely broken. Nebraska is the worst state in the nation for the inheritance tax, the seventh worst state for property taxes and only Wisconsin beats Nebraska in terms of the number of farm and ranch bankruptcies. By now, many property owners have figured out that last year’s big property tax relief bill, LB1107, was nothing more than a slight decrease in the amount that property taxes increased this year, and this is how things will continue to be unless we overhaul the entire system.

No small plan ever had the power to stir the soul. So, this year I introduced LR11CA and LB133 for the consumption tax. The first piece of legislation is a resolution for a constitutional amendment to change our tax system; the second is a bill to direct the legislature in how to implement the consumption tax. LB133 re-writes the tax code. Public hearings will be held at the Capitol on both pieces of legislation on February 3.

My legislation is known as the EPIC Consumption Tax Act, where the word EPIC is an acronym which stands for the elimination of Property, Income and Corporate taxes. My legislation will repeal the state income tax, the state sales tax, the state inheritance tax and all property taxes and replace them all with a consumption tax.

The consumption tax prevents double taxation. The consumption tax would tax services and new goods. Used goods would never get taxed, because goods should only get taxed once. Imagine buying a used car or a used boat and paying no taxes on the purchase!

The real beauty of the consumption tax, though, is that it prevents over-taxation. It is the one tax that the taxpayer can control. If you don’t want to pay the tax, don’t go shopping. Moreover, the consumption tax ties government taxation to the economy. The government only gets more money to spend when consumers spend more of their own money first. Alexander Hamilton favored the consumption tax above all other forms of taxation in Federalist Paper 21 precisely because it controls this kind of over-taxation. Hamilton said, “It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.”

Under the consumption tax, those living at or below the federal poverty rate would make no net contributions in taxes to the state. The reason is that the consumption tax comes with a monthly allowance or pre-bate which covers a person’s consumption taxes up to the federal poverty level. This is money that the state deposits into a person’s bank account or on a smart card each month. Every person living in Nebraska would get the monthly allowance, so the state would only keep consumption taxes on what each person spends above the federal poverty rate. Because everyone would get the monthly allowance, the consumption tax is sometimes referred to as the Fair Tax.

One of the concerns often raised about the consumption tax is called border bleed. Some worry that folks living in Omaha would buy their goods in Council Bluffs in order to avoid paying Nebraska’s consumption tax. But the argument from border bleed overlooks the fact that goods in Nebraska would come with a cheaper price tag than goods in Iowa. For instance, a can of motor oil in Nebraska might sell for 95 cents without all of the hidden taxes included, giving it a final cost $1.03 with the consumption tax. However, in Iowa that same can of motor oil would sell for $1.00 because of all of the hidden taxes, and after you tack on their sales tax, the final cost to the consumer would be $1.08. So, why would folks in Omaha travel to Iowa to spend more of their hard earned money?

The consumption tax would make Nebraska the envy of the nation! The consumption tax would elevate Nebraska to being the best state in the Union for taxation. Both businesses and individuals would want to move to Nebraska because of our new tax code. As Nebraska State Senator Steve Halloran of Hastings once remarked about the consumption tax, “We would have to build a wall around Nebraska to keep the people out, and Colorado would pay for it.”