In a pursuit of fairness, Nebraska Governor proposes to end state income tax


The modern Democrat party is perpetually in pursuit of arbitrary fairness in the tax code, until it unfairly targets their constituents by their arbitrary measures.

Photo by Chip Somodevilla/Getty Images

Photo by Chip Somodevilla/Getty Images

Most conservatives were dismayed, in November, with how poorly they did in the 2012 elections.  They were also a little confused, in January 2013, when many of the nation’s constituents appeared to be cheering for increases in federal taxes.

In a 2006 documentary on Ralph Nader, called An Unreasonable Man, an individual commentator blamed Ralph Nader for lower taxes.  It was an accusation that this man levied, with palpable hatred, for the candidate that he blamed for George W. Bush eventually achieving an electoral victory in 2000.

What is wrong with lowered taxes on individuals, conservatives, libertarians, and some citizens ask.  Why is the idea of more economic freedom so hard to sell to those that lavish in all the freedoms this country offers?

We could go into the multitude of reasons that liberals are against greater economic freedom for the individual, and we have done so in other blogs, but the culmination of these reasons is that they don’t believe it’s fair that one person earns $100,000 a year while another only makes $25,000, and they look to Washington to even those scales.

The reason given for wanting to allow the Bush tax cuts to expire on some income earners is that it’s only fair to force them to pay more.  The fact that lower to lower middle class workers are now paying more in Social Security taxes is seen as ancillary by some, because those people don’t pay that much attention to their paychecks.  They may see a little difference in their bottom line, when they see a couple of dollars missing, but liberals don’t believe that it will be large enough to eventuate in any political damage for the Democrat party.  If a lower to lower-middle class individual sees $30.00 to $40.00 dollars missing from their paychecks, in other words, they’re not going to get so outraged that they end up voting Republican on that basis alone.  Most of them are going to believe that Democrats in Washington are doing their best to make America fairer in general.  Most of them are going to believe that Democrats are “eating” the rich, sticking it to their obnoxiously rich neighbors, and leaving them out of the equation for the most part.  Or, if they don’t believe that, a good liberal will remind that living in the U.S. costs money, and that the only reason we have a debt at all is the decade of lowered taxes that preceded Obama, and that the roads they drove into work on that morning costs money, and “where do you think that money comes from anyway?”  Most liberals are confident that they can sell the recent spate of increases in federal taxes on the idea that they’re now fairer in total.

State leaders, such as Louisiana Governor Bobby Jindal and now Nebraska Governor Dave Heineman, have decided to put that rationale to the test.  On Tuesday, Governor Heinemen announced a proposal to end his state’s income tax, saying he wants “to make Nebraska more competitive with its neighbors by eliminating the tax on both individuals and corporations.”  Heineman said that “if a complete elimination of the two taxes could not be passed, he would push to lower rates on both individuals and corporations.”  He promised to make up for this lost revenue by reducing business exemptions to the sales tax.  Although Nebraska’s single-house State Legislature, its unicameral, is still officially listed as non-partisan, the political affiliations of its members show that the Republicans hold a 60% super majority, and they have expressed interest in Heineman’s proposal.

Nebraska’s personal income tax rate is currently 6.84 percent, higher than every one of its neighbors—Iowa, Kansas, Missouri, Colorado and Wyoming—according to a table accompanying Heineman’s remarks.  Most U.S. states tax both individual and corporate income, according to the Tax Foundation, a nonprofit and nonpartisan organization that measures federal and state taxes.  But seven states—Texas, Florida, Washington, Alaska, Nevada, South Dakota and Wyoming—do not tax individual income, according to the Tax Foundation.  Two others—New Hampshire and Tennessee—do not tax the earned income of individuals, but do tax interest and dividend income.  Three states — Nevada, South Dakota and Wyoming — have no corporate income taxes, according to the Tax Foundation.  Three others — Ohio, Texas and Washington—have no corporate income tax but tax the gross receipts of businesses.  Other states in the country’s midsection, including Oklahoma and Kansas, have also recently considered lowering taxes.{3}

Eliminating the state’s corporate and individual income taxes would realize a long-sought goal of the governor.  Heineman wants to elevate the state’s tax ranking for business to among the top 25 of all states, and perhaps to the top 10.

“I want us to be the best.  I want us to be in the top 10,” Heineman told reporters.

Right now, the Tax Foundation, a conservative tax think-tank, ranks Nebraska 31st in overall business tax climate; the state ranks 35th in income taxes. {4}

These state executives are taking the oppotunity to promote more fairness in their states by lessening their tax burden in the wake of the federal government’s decision to further the burden.

If this federal tax code is going to be about fairness, say some conservatives, in the aftermath of all of the recent federal tax increases and the subsequent fears of a future fiscal cliff, there may be one deduction worth eliminating: the federal deduction normally given for state and local taxes already paid.  The Congressional Budget Office estimates that this deduction currently costs the federal government $80 billion a year.{5}, and that federal coffers could see as much as $862 billion over a ten year period with this elimination.  The argument for elimination of this deduction would appear, on the surface, to satisfy the agendas of both parties in that it would raise the total tax revenue coming into the government without further raising taxes, and it would progressively penalize high income earners.  So, why is it that the political party that appears ready to stand against eliminating this deduction is the Democrats?  Because, they say, it’s unfair.

This is the constituency base that loathes Ralph Nader for standing in the way of more taxation in the 2000 presidential election?  This is the constituency base that voted for Barack Obama on the premise that he promoted “more fairness” by allowing the Bush tax cuts to expire on the wealthy.  Why would this constituency base be against paying more in taxes when it’s based on the premise of making things even fairer?

It’s actually unfair, says liberal, Independent New York City Mayor Mike Bloomberg, because elimination of this deduction would unfairly target New Yorkers.  Bloomberg was, however, all for the fairness of allowing the Bush tax cuts to expire on all incomes, but he stands against elimination of this deduction, because it’s not fair.  New York City is overwhelmingly Democrat, and Democrats are overwhelmingly for paying more in taxes, but they are also overwhelmingly in favor of fairness.

The absolute glory, for liberal politicians, of defining fairness is that it is entirely arbitrary, and a politician can arbitrarily move the goal posts of what fairness is depending on what they believe is fair.  If Bloomberg were president of the United States, he would’ve raised taxes on you, but he would’ve raised taxes on everyone else too, so you didn’t feel that he was being unfair to you.  If you were one of those that felt it was unfair, he would say something about how you didn’t need all that money.  “You won’t miss it,” liberal politicians say when confronted by a person that feels unfairly targeted, and you are supposed to give an embarrassed response for unfairly wanting to keep more of your money, because you know he’s working hard to make things fair for everyone, even if neither of you knows what that means exactly.

“Eliminating taxpayers’ ability to deduct state and local taxes from their federal tax returns—as some in Washington are discussing—would leave New York City residents holding much of the bill.  Many in the rest of the country pay very little.” {6}

Yet, if you listen to most Democrat politicians, not only is it fairer to pay more in taxes, it is also more patriotic, as suggested by Vice-President Joe Biden.  One would think Mayor Bloomberg, and every New York City resident would be eager to jump on any bus that allowed them to be fairer and more patriotic.

The National Review’s Jim Geraghty has proposed eliminating local and state deductions as part of a “tax Blue America plan.” Geraghty cites the Tax Policy Center, which says that taxpayers in California and New York alone account for 20 percent of the populace claiming these deductions.  In four blue states — California, New York, New Jersey and Connecticut — residents claim more than $12,000 in deductions, on average.

If we’re going to build our tax structure around these arbitrary ideas of fairness, couldn’t it be said that those states that voted to pay more in taxes, in the 2012 election, be allowed to pay them to the fullest extent, at least when it comes to eliminating those deductions they are allowed.  Why are Nebraska and California residents allowed the same deductions when it comes to state and local taxes already paid?  It seems that it’s unfair to California, or any blue state that voted to pay more in taxes, that they should be forced to use deductions.  They should be allowed to be more patriotic, and fairer, to the states that didn’t elect a government that promised to tax and spend us into oblivion.  It’s probably not very realistic to think that federal legislators will be fairer in this regard, so those of us in those states that feel unfairly treated by the federal tax code will have to look to state executives to use whatever tools they have at their disposal to achieve their arbitrary ideas of fairness as they see it.

{1}http://www.examiner.com/article/does-hollywood-affect-washington-or-vice-versa?cid=db_articles

{2} http://abcnews.go.com/2020/story?id=2682730&page=1

{3}http://www.reuters.com/article/2013/01/15/us-usa-nebraska-taxes-idUSBRE90E16I20130115

{4}http://www.omaha.com/article/20130115/NEWS/130119782/1685#who-pays-if-nebraska-eliminates-income-taxes

{5} http://money.cnn.com/2012/12/06/news/economy/state-local-tax-deductions/index.html

{6} http://www.businessinsider.com/mike-bloomberg-fiscal-cliff-deal-state-local-deductions-2012-12

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