Heineman calls for tax reform and increased support for education

Nebraska Governor Dave Heineman's State of the State address before state lawmakers on Jan. 15, 2013. Photo: Governor's office

Click here to listen to Gov. Heineman’s address

By staff and wire reports

Gov. Dave Heineman called for an overhaul of Nebraska’s tax system, saying the state needs to get rid of its individual and corporate income taxes and make up the lost revenue by shutting off as much as $2.4 billion in tax breaks for businesses.

The Republican governor unveiled his tax plan Tuesday during his annual State of the State address to lawmakers. Heineman says his plan would keep the state competitive with two neighboring states, Wyoming and South Dakota. Both have no individual income tax.

Heineman said he will introduce several options for lawmakers in the next few days that would eliminate sales tax exemptions for businesses. The governor did not specify which tax breaks he wants to eliminate, except to say he wouldn’t support taxing food.

In his State of the State message, Heineman proposed the following:

  • a budget that will promote economic growth and focus on education.
  • a tax reform plan that will eliminate or lower state income and corporate taxes by cutting sales tax exemptions.
  •  a 5 percent increase in special education funding and an increase in funding for the state’s college and university system in exchange for a tuition freeze.

Key points in the Heineman’s tax reform proposal:

  • No individual income tax for working Nebraskans.
  • No taxing of small business income.
  • No taxation of Social Security income.
  • No taxation of military retirement income.
  • No taxation of any retirement income.
  • No corporate income tax.

Read the full text of Heineman’s speech.

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