Don't Mess With Taxes

Photo by Clay Banks on Unsplash

Nebraskans frustrated by their state’s inability to come up with property tax relief plan turned to a broader tax overhaul, the EPIC plan.

EPIC stands for Eliminate all Property, Income and Corporate taxes. The measure would have constitutionally prohibited the legislature from imposing any tax except for a state-administered sales tax.

EPIC was first introduced in the Nebraska legislature in 2023, but never made it out of committee. That’s when the plan to take it directly to the state’s voters was born.

But that’s not going to happen either.

Epic ballot initiative fail: “The longshot petition to let voters replace property, income and corporate taxes with a consumption tax fell short of a bulk signature-gathering hurdle that often stops ballot initiatives that lack paid circulators,” reported the Nebraska Examiner.

EPIC supporters had to get 10 percent of state’s registered voters, or about 123,000 signatures, to amend the Nebraska constitution. Volunteer signature gatherers didn’t get enough signees by the July 3 deadline.

While people across the United States complain about all the taxes they pay, I suspect condensing them all into one tax caused many not to sign.

Epic sales tax rate needed: Some excise taxes would have remained in place, but EPIC would have left Cornhusker State consumers on the hook for paying for most of the state’s bills.

A tax plan relying on a single sales tax has never been tried. EPIC proponents said the rate would be 7.5 percent or 8 percent. But would that really be enough to cover all state and local public services?

At least one EPIC opponent, an analysis by OpenSky Policy Institute in conjunction with the Institute on Taxation and Economic Policy found that Nebraska would have to impose a consumption tax rate of 22.1 percent to achieve a revenue neutral result.

Then there’s the matter of the regressive nature of sales and consumption taxes. When a tax rate is applied uniformly regardless of a taxpayer’s income level, low-income taxpayers bear a disproportionate burden of the tax to their earnings.

It looks like Nebraska voters were thinking a bit more critically than their lawmakers when it came to the EPIC tax.

Sales tax rates nationwide: Nebraska's current state sales tax rate is 5.5 percent, putting it 29th among all states that collect sales tax. Additional tax tacked on by local jurisdictions ups the maximum combined sales tax rate to 6.969 percent.

Forty-five states and District of Columbia collect statewide sales taxes. No state-only rate is 8 percent which EPIC would have hit or at least nudged in Nebraska.

And since I know you’re wondering, the only states without a sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon. However, Alaska allows its towns to levy one if they so decide.

Nine states, including Texas, top the 8 percent level when you add in the other city, county, and special taxing district amounts. And six states have combined sales tax rates exceeding 9 percent.

Overall, sales tax rates throughout the United States have held steady in recent years. When they have changed, they’d dropped.

All these findings and figures are from the Tax Foundation. The Washington, D.C.-based tax policy nonprofit just took a look at state and local tax rates as of mid-2024.

The Tax Foundation’s interactive map embedded below gives you an idea of where your state stands as far as sales tax.

 
You can check out the additional state and local sales tax information and tables in the full article.

You also might want to read the organization's take on Nebraska's proposed consumption tax, The Shortcomings of Nebraska’s EPIC Option. 

You also might find these items of interest:

• Added Halloween scare: sales tax on treats
• Oklahoma’s grocery sales tax ends in late August
• Summer means sales tax holidays: 6 in July, 13 in August

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