The first item in the governor’s new tax plan that needs to be fixed is the part that calls for a two percent excise tax on new farm and industrial equipment. While the EPIC Option Consumption Tax would never tax transactions between businesses, including farm and industrial equipment, the governor’s plan calls for just that. Taxing necessary industrial and farm equipment is always a mistake.

Taxing farm equipment encourages farmers and ranchers to buy their equipment in other states where taxes are lower. We call this phenomenon “border bleeding.” Dealers near border states with lower farm equipment taxes would especially suffer from lost revenue as farmers and ranchers pass them on the highway to buy their equipment in other states.

The second item in the governor’s new tax plan that needs to be fixed is the Tax Equity & Educational Opportunities Support Act (TEEOSA). TEEOSA is the program that provides state support for public schools. Now is the best time to reform TEEOSA because lawmakers are working on comprehensive tax reform and several school districts will soon lose some of their state support, which will result in significant increases in future property taxes. For example, Bayard Public Schools, where I live, is projected to lose $427,947 in state support in fiscal year 2024, while Morrill Public Schools will lose $587,030 and Sidney Public Schools will lose $465,167. The last thing people in these school districts need is another increase in their property taxes, and that’s exactly what will happen if lawmakers don’t fix TEEOSA now.

Nebraska needs to replace TEEOSA with a new program that would benefit all school districts across the state. The EPIC Option Consumption Tax bill (LB16) that I introduced for the special session already contains a comprehensive plan to replace TEEOSA. I have worked with three school district leaders to create a new replacement plan for TEEOSA with simplified formulas that would benefit all school districts across the state. The governor could simply fix TEEOSA by applying the plan already outlined in LB16.

The third issue that must be addressed in the governor’s new tax plan is ending our state’s reliance on property taxes and income taxes. As economist Ernie Goss of Creighton University said in his testimony before the Finance Committee on the governor’s new tax plan, “Sales taxes are the least regressive form of taxation.” Moreover, as the U.S. economy continues to transform from a manufacturing economy to a service economy, it will become increasingly important and inevitable for states to tax not only consumer goods but also consumable services.

That’s why I proposed last Thursday that we begin implementing the EPIC Option Plan, with the goal of reducing the state income tax and property tax to zero. By setting these tax rates at zero, the legislature could avoid amending the state constitution, and these taxes could be reinstated at any time in the future by referendum if the state ever suffered a significant revenue shortfall.