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Governor calls for eliminating state income tax
Governor Dave Heineman has called for an overhaul of the state's tax system, saying the individual and corporate income taxes need to go. The governor made the proposal during his annual state of the state address in Lincoln Tuesday.
This is the budget for the state of Nebraska for the next 2 years, the governor introduced it this morning. In it he outlines education, the state's economy, and rebuilding the cash reserve fund. He also calls for sweeping changes to the state income tax and he addressed it all during his annual state of the state address.
Speaking before the 103rd Nebraska legislature, Governor Dave Heineman called for an overhaul of the state's tax system.
"Did you know that the state of Nebraska provides $5 billion in sales tax exemptions? Nebraska exempts more than we collect," said Heineman.
The governor proposed ending or reducing the state income tax.
The state currently exempts $5 billion in sales taxes annually, while only collecting $1.5 billion annually.
"Imagine if we eliminated just half of the current exemptions. What would that mean for our citizens," said Heineman.
Saying his tax reform proposal is revenue and budget neutral, the govenor emphasized the proposal will not tax food.
Senators say the proposal is a starting point.
"I'm not going in with any preconceived idea that we should do away with the exemptions nor that we should keep all the exemptions, but I think we need to have a conversation about where we want to go," said Senator Galen Hadley.
Also in the governors budget, making education a top priority.
"By increasing state aid to education from $852 million to $895 million in fiscal year 2014 and to $939 million in fiscal year 2015," said Heineman.
Additionally, the governor is proposing a 5% increase in special education funding in each of the next two years.
"I think it's a good starting point; 5% increase is a good starting point. I think once again, Senator Sullivan, there needs to be that bill that's introduced where we have a public hearing and we hear from our school district across the state," said Senator Heath Mello.
With his proposals now on the table, it's time for lawmakers to start those discussions.
The focus now will turn to the various committees that will be in charge of creating the different portions that make up this budget, of course that will take the next 80-90 days.
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