This week I would like to bring your attention to a tax problem that many who read my articles may not be aware of. On November 22 I attended a joint hearing of the Legislature’s Appropriations Committee and Revenue Committee at the State Capitol in Lincoln. The purpose of this annual joint hearing is to receive reports from the Nebraska Department of Revenue on the tax policies of the State. Of particular interest to me was an update on the State’s tax incentive programs.

I have been asked why a lame duck Senator from the Panhandle would travel all the way to Lincoln for a two-hour hearing just to receive tax information that won’t have any legislative bearing on him next year? The answer to that question has to do with the oath of office that I took on my first day as a Nebraska State Senator. As far as I am concerned, that oath of office runs clear through to the finish line. I will remain a Nebraska State Senator until my term formally expires on January 8, 2025.

There are two major reasons why Nebraska has and will continue to implement tax incentive programs. The first reason has to do with the overall tax burden of Nebraskans. Our taxes are simply too high. Business do not want to move to Nebraska because of our over-burdensome tax code. The second reason has to do with competition from other states. Because other states have tax incentive programs to lure businesses to their state, Nebraska has to have similar tax incentive programs in order to stay competitive with those other states.

Nebraska’s first major tax incentive program came in 1987 through LB 775 and is known as the Employment and Investment Growth Act. Over the years this tax incentive program has paid out refunds and tax credits in excess of $4 billion. Currently, there remains 28 outstanding contracts. In 2024 $10 million in tax credits were claimed; however, the total amount of credits from these contracts yet to be claimed amounts to $45.6 million.

The next tax incentive program that I would like to tell you about came in 2005 through LB 312 and is known as the Nebraska Advantage Act. One of the main goals of the Nebraska Advantage Act was to incentivize ConAgra to keep their headquarters located in Omaha. As you may recall, ConAgra moved their headquarters to Chicago on October 1, 2015. So, the program worked very well!

As of June 30, 2024 the total amount of tax incentives earned by the Nebraska Advantage Act was $2.39 billion. This tax incentive program will average a net loss of more credits than tax income of over $150 million per year for at least the next 10 years. The program is now costing the State of Nebraska more than $120,000 in tax incentives for every job that it creates. Currently the Nebraska Advantage Act has tax credits or refunds yet to be claimed in excess of $1.3 billion.

I am confident that by now you have figured out that these tax incentive programs don’t work and are really nothing more than a shell game for big businesses in Nebraska. Again, we implement these tax incentive programs for reasons that make no sense at all. The most serious issue with these tax incentive programs is that they are designed to pick winners. The losers are the ones who don’t qualify for the tax incentive programs. Those businesses which are ineligible to benefit from these tax incentive programs cannot compete with the ones who are eligible.

This may come as no surprise to those who frequently read my column, but the tax system in Nebraska is completely broken. Unless legislators in Lincoln do something to stop this government waste and become the state of choice where people choose to live, not because of some government tax incentive program, but because our taxes are fair, open, and transparent, Nebraska will only fall deeper into this tax incentive hole. There is only one solution that I know of to fix this problem and discontinue this tax and spend policy that we currently operate under, and that is that we must change the way we tax people and implement a consumption tax that allows the taxpayer to pay the taxes they can afford to pay when they consume something. The Epic Option Consumption Tax is the answer.