Article Posted on 05/29/2019
Looking Back: Nebraska's Failed Tax Shifts
Nearly three decades ago, in 1990, the Nebraska Legislature passed a measure (LB1059) to impose a massive tax shift by raising the state sales tax from 4.0% to 5.0%, while increasing the income taxes paid by individuals, corporations and financial institutions. At the time, supporters of LB1059 promised the bill would deliver local property tax relief since it expanded state aid for public schools. The plan worked -- but only for a few months. By 1992 -- less than two years after LB1059 took effect -- property taxes soared by roughly 10% statewide, according to a 1996 report by the Nebraska Tax Research Council. (The report's chart is pictured above.) In its report, the Council wrote: "Since 1966, the Legislature has provided numerous forms of property tax relief through direct state aid, by creating alternative sources of revenue, and by allowing the state to assume control over certain local government functions. ... The process of providing alternative revenue sources in hopes of reducing property taxes has simply not brought the results that Nebraska's taxpayers have been looking for." The years following efforts by the Legislature to reduce local property taxes (1968, 1973 and 1991) brought "abnormally high property tax increases," according to the report.