State of the State: Gov. Heineman wants changes to Nebraska tax system

Jan 15, 2013

Governor Dave Heineman wants to eliminate Nebraska’s individual and corporate income taxes.

Heineman announced the tax plan during his State of the State speech Tuesday. A budget report from the Nebraska Legislature says the state will bring in about $4.2 billion in revenue from those taxes in the 2011-2013 biennium.

Heineman says the state provides $5 billion in tax breaks. "Imagine if we eliminated just half of the current exemptions. What would that mean for our citizens? Nebraska wouldn’t need to have an individual income tax or a corporate income tax. And without the individual income tax and corporate income tax, there would be no income tax on working Nebraskans."

Senator Jeremy Nordquist of Omaha says he's strongly opposed to the tax plan. He says it could actually result in lower and middle-income Nebraskans paying more for some services. 

"It takes a lot of sales tax revenue to replace the income taxes being paid by the wealthiest Nebraskans like Warren Buffett and Pete Ricketts and people like that, it takes a lot of taxes on health care services to replace that," Nordquist says. "And for me, when you start taxing essential pieces of life like health care, you make the tax code much more regressive."

The Governor requested more state aid for K-12 schools and community colleges over the next two years. Heineman’s budget request recommends a 5 percent increase in state aid for each of the next two budget years.