Nebraska Gov. Dave Heineman's tax plan is pitting the Republican governor against many of his traditional allies in the business community who welcome the conversation, but say his specific plan would create financial uncertainty.
Heineman presented his plan to a legislative panel Wednesday with an argument that it would benefit small businesses, working Nebraskans and veterans.
Some lawmakers challenged the assertion that eliminating the income tax and ending sales-tax exemptions would help the economy. Heineman argued that the risk of not acting outweighs any uncertainty.
Groups that represent retailers, banks and independent businesses have come out against the proposal sponsored by senators Beau McCoy and Brad Ashford, both of Omaha.
Heineman took aim at "big businesses with their highly paid lobbyists" and argued that the tax exemptions they enjoy come at the expense of working-class Nebraskans. The comments came from a governor who has hammered for years on the need to lure new, large employers to Nebraska.
Heineman is seeking to end billions of dollars in sales-tax exemptions in exchange for eliminating Nebraska's income tax. Many business groups have raised concerns about the bill, saying it would create uncertainty for manufacturers, processors and industries that serve agriculture.
Business leaders and some lawmakers challenged the proposal Tuesday. During a Wednesday morning news conference in Lincoln, the governor laid out his argument. He was surrounded by his newly bolstered support of various Nebraska veterans groups, including the Department of Nebraska Veterans of Foreign Wars. The group's state commander, Dave Beran, says the bill would ease the financial burden on veterans, many of whom live month-to-month on social security benefits.
"Why does the Lozier Company in Omaha get an exemption and they don't have to pay sales tax on the energy they consume in their business?" said Heineman. "And these guys who defended our country don't get an exemption for their military retirement."
LB 405 calls for cutting the personal and corporate income tax. Heineman says that lost revenue would be made up by eliminating more than $2 billion in sales tax exemptions.