Superintendent Press Release December 1, 2023
Dear Cedar Bluffs Families,
You may have seen these signs around Nebraska but what do they mean? The EPIC option is a taxation concept brought to the Unicameral for the past 2 years by Senator Murman. The idea behind EPIC is to Eliminate Property, Income and Corporate Tax by imposing a consumption tax alone. And while this concept has failed to advance out of committee at the Nebraska legislation, there is a well-financed group that is now trying to get it on the November 2024 Ballot. As many of you know, I serve on the Nebraska Rural Schools Association Legislative Committee and am heavily involved each year meeting with legislators and committee members trying to advise on what is good policy and good politics for Nebraska Rural Schools. EPIC is NOT good policy. I spent most of the day in Lincoln on Wednesday listening to several Legislators who are worried that this new form of taxation has a chance to get on the ballot after failing to advance in the legislation. There are two petitions being circulated that started this summer by paid solicitors and you may have seen them at county fairs. It seems easy to get signatures on a petition drive when all they have to say is “don’t like paying property or income tax, sign here”. But if you look at it closer, as Senator Jacobsen from North Platte stated Wednesday, it’s not that easy. Currently it takes about $12 billion dollars to run the State of Nebraska including governments, prisons, schools, roads, etc. Nebraska relies on a three-legged stool of property, income, and sales tax. In 2023, property taxes made up roughly $5.3 billion and are set by locally elected boards whether that is school boards, county boards or village boards. Another $4.4 billon came from Income tax and the remaining $2.3 billon come through sales and excise taxes. The legislation passes laws that control income, sales, and excise taxes. Excise taxes are considered the “sin taxes” like alcohol, tobacco but also gas tax that you pay every time you fill up your vehicle. The Nebraska Legislation passed some of the largest income tax cuts last year mostly because assessed valuations continue to rise which has led to more and more property taxes coming in and has unbalanced the 3 legged stool. Property taxes in 2020 where $4.54 billion. In 2023 they rose to $5.3 billion. We all agree that property taxes are too high but the legislation by making cuts to income and sales taxes continue to shift the burden and blame on locally elected officials who set the property tax levies. All of this has led to the idea that we should eliminate all taxes except a “consumption tax”, which is in essence a sales tax. The current sales tax in Nebraska is 5.5%, that is what produces the approximate $2.3 billon and the architects of EPIC say they can replace property taxes and income taxes by having a consumption tax at 7.5%. The math doesn’t work. Independent modeling by State Department officials say it would take a 22.1% consumption tax to replace the $9.7 billion currently produced by property and income taxes. Who would buy anything in Nebraska if you had to pay 22.1% taxes on it? This would drive businesses out of Nebraska. Furthermore, EPIC officials have no plan on how to institute this consumption tax but say the Nebraska legislation must figure it out. If this concept is voted in as law on the November 2024 ballot, the Nebraska legislation would be required to have all rules for the consumption tax in place by January of 2025, just 2 months later. So, let’s look at what the consumption tax would look like. If my company made a stapler, I would need to purchase metal (consumption tax), buy plastic for the handle (consumption tax), buy the spring (consumption tax) just to assemble the stapler together and now sell it to our consumers (consumption tax) at 4 times what it should cost. No other State in the United States has this concept because it doesn’t work. Furthermore, a consumption tax is regressive and will hit the lowest wage earners hardest. There are no easy answers, but we should lower property taxes by balancing the 3 legged stool and only the legislation can do that. Balance the Stool!