Last Thursday the Revenue Committee advanced my priority bill up to General File, which means that the bill will now get debated on the floor of the Legislature. LR 264 CA is my priority bill, which is a resolution for a constitutional amendment for the consumption tax. If LR 264 CA passes in the Legislature this year, voters will have the opportunity to vote on the ballot initiative to amend the Nebraska State Constitution in November. Before we can pass any legislation to rollout the consumption tax, the Nebraska State Constitution must first be amended.

Nebraska’s tax system is broken and needs to be replaced. We can no longer afford to fix our broken tax system through slow, incremental legislative changes. Young people are leaving the State, the elderly cannot afford to live here, and companies struggle to find employees.

Nebraska’s tax system needs to be blown up! Iowa has now set the example for Nebraska. In the period from 2011 through 2020 Iowa experienced 155 farm bankruptcies, so their state legislators decided that it was time to do something drastic. Last week Iowa Legislators passed legislation to implement a 3.9 percent flat rate income tax. While the consumption is far superior to the income tax, Iowa’s legislators demonstrated the same kind of resolve that Nebraska’s State Senators need to exhibit in order to fix our broken tax code. Like Iowa, the time has come for Nebraska to do something drastic.

If Nebraska converts to the consumption tax, our citizens will be better off than Iowa’s citizens in three ways, and today I would like to show you three ways that the consumption tax is superior to Iowa’s flat rate income tax.

First, people should only be taxed once. While Iowa eliminated taxes on retirement income, they retained their state sales tax, the excise tax, and their property tax in addition to their flat rate income tax. To the contrary, LR 264 CA would repeal all taxes, except for the consumption tax and the excise tax. Under the consumption tax a good or service can only be taxed under the consumption tax or the excise tax, but never under both.

Second, people should know how much they pay in taxes to the State. Although Iowa has adopted a flat rate income tax, their tax code remains complicated and is not readily apparent to taxpayers. Iowans will never know how much they really pay to the State in taxes each year. By imposing so many different kinds of taxes on the people, Iowans have to be accountants to know how much they pay in taxes each year. To the contrary, under the consumption tax retail receipts would be required to report the taxes paid for every new good or service purchased for consumption in Nebraska.

Third, taxes should never impede investment. By taxing the income of its citizens, Iowa limits the ability of its citizens to invest their hard-earned money. The income tax always leaves the taxpayer with less money to invest. To the contrary, the consumption tax never taxes investments and always leaves open the option to invest one’s hard-earned money before paying taxes. The consumption tax gives each citizen the option to either invest their income or to pay taxes. Consequently, the consumption tax encourages savings and investment, whereas the income tax, including the flat tax, does not.

As you can see, the time has come to replace Nebraska’s broken tax system with one that works. While Iowa has taken a step in the right direction, their solution does not resolve all of their tax problems. By passing the consumption tax, Nebraska would have the best tax code in the nation.