When it comes to Nebraska’s tax incentive programs, the costs outweigh the benefits. What the State of Nebraska needs is total tax reform, not more incentive programs for businesses. So, today I would like to shed some light on how much Nebraska’s tax incentive programs have been hurting the taxpayers of our State.

The Nebraska Advantage Act was passed back in 2005 primarily as a means for keeping Con Agra headquartered in Omaha. The program did not work. In 2015 the State of Illinois wooed Con Agra to their state by offering the company an even better tax incentive program through their state’s Economic Development for a Growing Economy (EDGE) program. Illinois offered Con Agra $630,000 per year in tax credits if it moved at least 150 jobs to Illinois for the next 15 years.

The Nebraska Department of Revenue recently released a report on Nebraska’s tax incentive programs and the numbers do not look good. From January 1, 2006 through June 30, 2022 businesses have earned almost $1.8 billion in tax credits through the Nebraska Advantage Act. During that same period of time businesses have cashed in on almost $910 million in tax credits. According to the report, there remains about $850 million in outstanding tax credits yet to be used. That’s a lot of money out of the State’s coffers.

Whenever businesses cash in on these kinds of tax credits, taxpayers always feel the pain. The incentives offered through the Nebraska Advantage Act and the ImagiNe Nebraska Act come in the form of tax credits. So, whenever businesses use their tax credits, it leaves a gigantic hole in the amount of revenue coming into the state. Whenever that happens the State has to fill in the gap. Theoretically, these businesses could cash in all of their remaining $850 million in outstanding tax credits in a single year and devastate our State Budget.

These tax incentive programs make it difficult to create a state-wide budget. Because I serve on the Legislature’s Appropriations committee, I see first-hand what kind of havoc these incentive programs wreak on our state budget. Because those of us who serve on the Appropriations Committee never know when businesses plan to use their tax credits, crafting the state budget always becomes a kind of guessing game for lawmakers in Lincoln.

Those who advocate for these kinds of incentive programs for businesses like to tout about how many new jobs they bring into Nebraska each year. But the number of new jobs created by these incentive programs does not justify the expense. For example, the report indicates that these tax incentive programs have created 1,754 new jobs each year. If we estimate that each new worker would pay the State roughly $4,000 annually in income taxes and sales taxes, it would take the State the next 21 years for these new jobs to finally pay for themselves.

According the U.S. Bureau of Labor Statistics Nebraska has the fourth lowest unemployment rate in the nation set at 2.2 percent. Businesses are begging for employees and we see help wanted signs everywhere we travel around the State. Nebraska does not have enough workforce to sustain our current workforce needs. So, even if these incentive programs were to create another 1,754 new jobs, there is no guarantee that there would be qualified employees waiting in line to fill these jobs.

What Nebraska really needs is total tax reform. People living in Nebraska continue to suffer under our State’s heavy tax burden and broken tax system. Tax incentive programs for businesses, such as the Nebraska Advantage Act and the ImagiNE Nebraska Act do absolutely nothing to help the average taxpayer and they leave businesses worrying about when they might have to move to another state with a better tax incentive program. I believe businesses will want move to Nebraska once Nebraska adopts the best tax code in the nation, and the EPIC Option Consumption Tax remains the best answer to Nebraska tax problem.