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Farmers brace for possible cuts
From pharmacists and church leaders to college administrators, many groups have raised concerns about specific sales tax exemptions being proposed by Governor Dave Heineman.
One of those groups who could be hit the hardest, farmers. Heineman pitched his plan during his State of the State has a way to boost Nebraska's economic growth. It's definitely something farmers will be keeping their eye on during this legislative session. If the governor's tax plan was enacted, farmers would pay more in sales taxes in both good and bad years whereas the income tax allows them to pay less when they aren't as successful. They say losing these exemptions would be devastating. "Agriculture is different today than it was in the 1960's," said Governor Heineman. The proposed elimination of specific sales tax exemptions has many farmers worried. "I think some people are going to be a little bit shocked, little bit frustrated about it just because the sheer numbers when they see what those dollar figures are," said farmer Brandon Hunnicutt. Those figures - $42 million in seeds for commercial and agricultural use, $87 million in agricultural chemicals, $82 million in energy used in agriculture and $1.4 billion in manufacturing components. "It looks like there's going to be some challenges for agriculture there's a lot of the tax exemption on agriculture that looks like they're right in the cross-hairs of them coming after them," Hunnicutt said. The cuts would mean huge increase in sales taxes for farmers and ranchers, raising their costs even in years when agriculture hits a down cycle. "When the price of corn or soybeans or whichever the commodities start to go down, usually our input prices don't track as fast going down or they'll be higher so you end up paying on the input side and you're not, you don't have as much coming in," said Hunnicutt. The governor addressed the sale tax during this State of the State address last week. He said it's been 5 decades since Nebraska has had a discussion on tax codes. The state exempts $5 billion in sales tax annually, way more than they take in. "I know it's going to be a tough conversation, but I know we can have it," said Heineman. "It's going to be a struggle at some point throughout the farming community," Hunnicutt said. The governor gave two options for senators to consider toward his goal of reforming the tax structure. The bolder move would eliminate individual and corporate income taxes and $2.4 billion in existing tax exception. The second option would remove about $395 million in sales tax exemptions to compensate for eliminating the corporate income tax. Of course, senators will be debating these issues and much more during this legislative session. |
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