Nebraska currently has the 7th highest property tax in the nation and is in need of property tax reform that addresses the underlying problem of a local tax system that imposes too great a burden on the state’s taxpayers. The Platte Institute supports a path forward to reducing property taxes, but not at the expense of raising other taxes that would harm the state’s economic growth.
The reason this amendment exists is because many Nebraskans want significant property tax relief. However, we are concerned about the impact of rising state taxes on Nebraska’s economic growth, which could be a consequence of this legislation. Simply offering a credit for property taxes paid does not solve the underlying problem of local government spending.
Over the last year, the Platte Institute has conducted extensive research into the property tax issue. A recent poll we conducted finds that a strong majority of Nebraskans support a new state law to further limit how much property tax local taxing subdivisions can collect, either by limiting property tax rates or valuations. Through our research and responses from the poll, we’ve come to the conclusion that the only way to substantially and sustainably reduce property taxes is to enact limitations on property taxing authority at the local level.
This proposal does not do that. There is nothing in this amendment that caps future costs. Any taxing political subdivision would be foolish not to levy the maximum property tax levy if they can get away with it, because 35% would be paid back to their voters by the state, no matter how high valuations go.
In addition, this bill does nothing to address the high tax burden on those that do not own property. Nebraska has the 15th highest income tax rate in the nation and one of the highest in the region. Unfortunately, we can’t just pay people 35% of what they pay in property taxes without either making major cuts to the budget or enacting very large state tax increases.
We’ve heard from the people testifying in support of this plan, but we must put our differences aside, and find some consensus about how to structurally reform the property tax without imposing new barriers in our tax system.
The Platte Institute believes the state needs to address the property tax burden, but this bill is not the answer. It would be a shame to replace the property tax with higher income taxes and other state taxes that are detrimental to economic growth.
Thank you and I would be happy to take any questions from the committee.