WhiteSites Blog
WhiteSites Blog
There is a proposal floating around called EPIC 2.0. Its goal is to get a voter initiative on the next ballot that would Ban Income, Property, and inherritance taxes. This might sound great, but State and County Governments still need to generate revenue some how. That only leaves consumption taxes to make up for the shortfall.
First all things being equal we need to assume that current revenues need to stay the same. So lets say you currently own a house that is valued at $500K, which is pretty common in nebraska. Thanks to the reduced property taxes by Govenor Pillen last session. we now pay about 1.75% in property taxes. This equates to a tax bill of $8750. Lets say your household has an annual income of $100K. Income taxes are about 6%, thats another $6000. So thats almost $15K that the state of Nebraska will need to make up for.
A consumption tax logically could be increased ( sales tax ) to make up for the difference. But for the example household, they need to pay $1250 / month in taxes through consumption taxes in order to make revenues the same. That could mean over 30% sales tax. Now considering how consumers these days order tons of stuff online via Amazon. Collecting these taxes for the state will be easy. But the state still needs to collect from local small businesses.
The biggest problem you will have is people who want to make big purchases, will likely travel to out of state where the taxes are lower. What you will end up creating is a booming industry of businesses lining the borders of the state of Nebraska. Cross the boarder and buy that engagement ring. That Big screen TV. Or your monthly wholesale run at SAMS.
I remember back in the 80s when gasoline was about $1 / gallon. All you had to do was cross the border over to Iowa where gas was 15 cents per gallon cheaper. There was a small gas station just across the bridge in Iowa that likely sold more Gasoline from its 4 pumps, than any of the Mega stations over in Nebraska. It didn't matter what day you went or what time of day, there would be a line of cars waiting to fill up.
The same thing will happen if you increase sales taxes. Consumers will find a way. Especially lower income consumers who live close to the border. Plus these people will likely smuggle house hold goods back across the border and sell to friends and family.
You will end up creating a black market of everything from Walmart. Regulations and high taxes just create business opportunities for surrounding states. For over 20 years Nebraskans have driven to Council Bluffs to loose money at their Casinos, helping to prop up the state of Iowa. If this passes, Iowa, Kansas and Missouri will have a massive boost to their economy.