Standing before the state Revenue Committee on February 6, 2013, Nebraska Governor Dave Heineman (R) testified in favor of LB 405, which would eliminate income taxes and expand the sales tax base. He spoke of the need for "a modern tax system to create more jobs and higher paying careers for our sons and daughters, our grandkids." This was the position he put forth during his State of the State address in January. Broadening the sales tax base was part of his plan.
A Step Back
Yet on February 16, 2013, the governor withdrew his support of LB 405 and the similar LB 406. He reportedly asked lawmakers to "kill both proposals" during a phone conversation on Saturday with Senator Galen Hadley, chairman of the Revenue Committee. His reason? "[A]fter hearing concerns from lawmakers, farm groups and other Nebraska residents," he decided "the process was moving too quickly."
The governor also reportedly spoke Saturday of creating a "level playing field" -- a phrase that often surfaces during discussions about marketplace fairness and online sales tax. The Marketplace Fairness Act of 2013 was introduced to the Senate and the House on February 14, 2013 and has already garnered a great deal of public support. Nebraska has been a full member of Streamlined Sales Tax -- an organization working toward marketplace fairness -- since 2005.
As requested, LB 405 and 406 will be killed. For now, changes to Nebraska's sales tax and income tax are off the table.
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