Nebraska’s high property taxes are a hot issue right now, and State Sen. Tom Briese of Albion is a leader in efforts to provide relief.  Property taxes are a vestige of the days when most people were farmers.  Owning land implied an income-generating ability, and when the vast majority of income came from farms it made sense to fund governments from them.  But today, when farm owners are in the minority and commodity prices are ridiculously low, this needs to be rethought.

The only “fair” tax is income tax because it’s based on the ability to pay, but since everybody is acutely aware of paying it (unlike sales and excise taxes), everybody hates it.  So for obvious political reasons, income taxes are the last taxes to be raised.

It’s really no wonder that since farmers and ranchers are now a minority – and thus have limited power at the ballot box – there’s been a steady increase in property taxes.  Property tax revenue in Nebraska roughly equals all other taxes combined. And because Nebraska relies on property taxes for the vast majority of its public education funding, efforts to cut these taxes again and again run into a wall.  We simply can’t pare educational spending down enough to result in meaningful tax relief.  But with spending on public education in Nebraska adding up to around $4 billion each year, there’s seemingly no way to offer a substantial increase in state funding to provide property tax relief (Nebraska’s overall state budget runs around $4.4 billion).  Income taxes and/or sales taxes would have to be raised substantially to provide a balanced sales, income and property tax dependency.

And finally our state senators are beginning to recognize this.  Sen. Briese has introduced LB 314, a bill that would be “revenue neutral,” meaning that while some taxes would go up so that property taxes could go down, overall taxation should remain the same.  Only now the burden of financing our schools would be more evenly distributed.

Raising state sales tax half a percent, reinstating sales tax on items like pop and candy, collecting online sales tax, and raising excise taxes are all part of this process.  As is a previously-taboo tweak of our income tax system – the adoption of a progressive income tax, which would impose a higher tax rate upon higher earners.  Currently Nebraskans earning more than $30,420 are in the same income tax bracket as billionaires like Warren Buffet.

Charging the rich more in taxes has long been the case at the federal level (under President Eisenhower top earners were effectively taxed at over 50%).  But in Nebraska that’s not the case.

Naturally, there’s a lot of opposition to this from the rich.  Governor Ricketts’ father, billionaire TD Ameritrade founder Joe Ricketts, says this would be punishing people for “working hard.”  But I have to wonder, who works harder than Nebraska’s farmers and ranchers?

We also hear a lot about the need to give tax breaks to businesses as “incentives” to locate and/or remain here.  But agriculture is Nebraska’s biggest business – why have we saddled it with the majority of Nebraska’s tax burden?

As a landowner, I pay about 5 times as much in property taxes as I do in state income taxes.  And while I hate to see my income taxes go up, meaningful property tax relief would result in a net tax reduction for all landowners – and without endangering funding for public education.  So here’s hoping that Sen. Briese’s bill gets the support it needs to not only pass, but to override our uber-wealthy governor’s inevitable veto.