In Nebraska, tax reform is gaining momentum, chamber president says

(The Center Square) – Tax reform appears to be gaining momentum in Nebraska, Bryan Slone, president of the state’s Chamber of Commerce, told The Center Square.

“I’m not going to shortchange how difficult it really is,” Slone said. “But I think Nebraska is in a really unique place from an economic competitiveness standpoint going forward. All of our major industries – agriculture, manufacturing, financial services, transportation logistics, engineering – did relatively well even through the recession.”

These industries have the potential for more growth to come, the chamber president said.

“These are industries where technology is going to drive large amounts of growth for the next decade,” he said. “Really the issue for Nebraska is one of workforce, the ability to attract people and workers to the state. Tax modernization needs to be part of that effort. We need to be as competitive as we can be.”

Slone favors tax codes that broaden the base for taxes but lower the rates.

“It’s been proven that it does drive economic growth,” he said. “I would expect to see that tax modernization in Nebraska.”

With labor in short supply, any tax revisions need to keep in mind the impact on middle-income workers, Slone said.

“You also need to be very cognizant of the cost of technology and innovation for entrepreneurs within your state – things like research and development credits and innovation credits,” he said.

The economy is increasingly moving from a goods economy to a service economy, Slone said.

“There’s no doubt that states will, more and more, move to tax services,” he said. “The issue with taxing services is that all 50 states compete with each other and businesses are very mobile these days. I think states will be reluctant to tax services when other states don’t. But over time, I think you will see all states begin to tax services more.”

Broadening the tax base would allow income tax rates to be lowered, Slone said.

“We would love to see income tax rates in Nebraska between 4% and 5%,” he said. “That would really make Nebraska competitive in attracting workforce and businesses to the state.”

The current top rate in Nebraska is 6.84%.

A report called Blueprint Nebraska unveiled earlier this year presents a plan to maintain the state’s prosperity and continue “growing the good life,” The Center Square reported.

The report by the non-profit group The Platte Institute calls for “tax modernization,” increased rural broadband service and expanded housing.

The revenue from expanding the sales tax to services such as health care would be used to create a “flat tax” on corporate and individual income that would exempt all income under $50,000 from state income taxes.

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