Episode Transcript
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Speaker 1 (00:00):
Pleasure to welcome doctor Ernie Goss back to the program
from Creating University, our official economist. Earnie.
Speaker 2 (00:05):
Good morning, Good morning Garytee you and your accomplices there.
Thank you for having me on.
Speaker 1 (00:10):
Yes, sir, you had a large hand in helping develop
what has turned out to be LB one of the
Governor's plan in the special session relative to property taxes.
Lots of opposition coming in in this testimony in front
of the Revenue Committee and some in favor. How do
you see the chances for this thing surviving in anything
(00:31):
like its original form?
Speaker 2 (00:34):
Well, Gary, first off, I'd just like to thank my
co authors Scott Strain and Monique DeVillier. And secondly, we
did not help develop it. This was developed by the
Governor's office. We came in late about eight days ago
that we met with a governor and he asked us
to evaluate the plan, and we indicated we would evaluate
(00:54):
two portions of the plan and that would be first off,
the growth aspects of the plan, In other words, what
is this going to contribute to economic growth? And secondly,
what about the constitution the ras The constitution requires the
state government to provide the funding for k through twelve spending,
so we evaluated that as well.
Speaker 1 (01:15):
All right, you have issues with and Rosie's pointed this
out too, Keith and Nebraska Examiner has a big report
on that this morning about how tip financing might be
impacted and that's a big economic development tool. What do
you think of that issue?
Speaker 2 (01:34):
It is Gary, but we can't base our funding our
tax system based upon these special cutouts and incentives. I'm
not opposed to the incentives, but sometimes they distort the
overall economic growth. And what I was hearing so much
about is, well, we've got to They never talked about growth.
(01:57):
We never talked about growth in terms of tax policy.
We talk about how fair it is and who benefits
and who loses. We were we looked at the growth aspects.
So we found that property taxes are most detrimental to
growth in the state among the states, and Nebraska is
very heavy in terms of property taxes. On the flip side,
(02:18):
sales taxes have the least negative impact on growth, and
Nebraska is very light on sales taxes, so Nebraska can
move some of its tax burdened large portion of it
from property taxes for sales taxes. And that's what we
looked at One.
Speaker 3 (02:32):
Of the arguments Erny that the detractors to Governor Pillon's
plan have barked about is how woefully unfair this is
to the underserved, that poor people are going to get zapped,
and that they are really, really in for it if
this plan passes. Because of all of these new sales
taxes that have come will come off the exempted roles.
(02:55):
I believe that the most of the stuff that will
be taxed and now that loses this exemption wouldn't necessarily
be purchased by the underserved. But what did your research
find about the impact on what you would consider low
income Nebraskans.
Speaker 2 (03:11):
Well, first off, Rosie, we didn't look at that element
of the package. However, we hear all so much about
this that the sales tax that property taxes are less regressive. Well,
I don't find that to be the case. In other words,
both to all taxes are detrimental or negative to growth.
It's just that property taxes more have a heavier impact
(03:32):
on growth than sales taxes, and Nebraska is much more
competitive in sales taxes and less competitive in property taxes.
But nonetheless, to do a treasure or question there that
we didn't look at But I have to say I
don't find that to be what's going to happen. In
other words, the idea that renters don't pay property taxes.
(03:52):
The renters do pay property taxes, and ultimately they pay
many of the other taxes that we and they don't
pay a heavier proportion. The idea that somehow sales taxes
are much more regressive, are much less regressive, are more regressive,
I should say, than property taxes. I don't find that
(04:13):
to be the case.
Speaker 3 (04:13):
Because one of the arguments of the Open Sky Institute,
which is always looking out for undersured people, says as well,
if we cut property taxes, that means that poor people
will have a greater share of their income go to
taxes than people who will own property, of course, ignoring
the fact that most folks who will save on property
taxes will reinvest that and you'll generate significant sales taxes.
(04:34):
But the other thing that is lost in the conversation
is that most of these exemptions will come for manufacturing
and agriculture. And I don't know how many people that
are living at or below the poverty line looking for
an architect, a lawyer, or a CPA, because they will
those services will now be getting taxed.
Speaker 2 (04:56):
But Rosie, the fact is if you reduce taxes in
this this will reduce taxes. The program will reduce taxes.
The fact that a rich person gets more of the
benefits than I do, but we both benefit. That's the question.
In other words, both rich and poor benefit from a
tax reduction. The fact that perhaps a rich get more,
it's just not an argument, it's not a good argument
(05:18):
in my judgment to reject the plan.
Speaker 1 (05:20):
Ernie and your analysis, did you look at the potential
unintended consequences where some of the policies embodied in this
plan could put an undue burden on certain kinds of businesses,
for example, to the point where they may move out
of state. Did you look at it all? But I'm
thinking about some of these taxes, right.
Speaker 2 (05:44):
We did not look at that element of the tax
we had. By the way, Gary, my colleagues and I,
we had eight days to examine this. We met with
the governor about nine days ago, so we examined this issue.
But there is there As I said, all the all
taxes have some negative impacts, and there will be some companies,
(06:04):
some individuals that may move for one reason or the other.
And taxes are part of that movement. I mean, you've
got when I speak in Wyoming, I find that I
got a lot of folks out there that used to
live in Scott's Bluff, you know, and they moved to Wyoming,
they moved to Cheyenne because of the tax burden.
Speaker 3 (06:21):
Well, I would ask and Satader, maybe this is a
question you could answer. You you're more connected to it
than I am. But the syntaxes that he's talking about
are vaping services, cigarettes. I think that that's really the cruck.
Speaker 1 (06:37):
Well, here's the thing, and there are there are craft
brewers are a nice growing industry in the state, and
certainly here in Omaha. You have tobacco shops, so that's
basically that's all they sell. You have vape shops. That's
basically all they sell. And the governor specifically listed those
kinds of businesses. And you're going to get hammered. Well, yeah,
(07:00):
at what point do they say, Okay, I got to
close my doors. That's all.
Speaker 3 (07:03):
Well, And the other question is how many people will
continue to buy cigarettes or buy vaping products even though
there's a significant tax on it. There are still people
buying cigarettes, and there are still people that are buying
these kinds of products. I think he's talking about online
gaming too. Is this going to stop somebody from gambling online?
Speaker 1 (07:24):
I don't know. It's an addictive behavior. Ernie, let's stay
in touch on this. Obviously interesting times there with this
issue in the special session. That's our official economist, doctor
Ernie Goss here on kfab's Morning News
Pleasure to welcome doctor Ernie Goss back to the program
from Creating University, our official economist. Earnie.
Speaker 2 (00:05):
Good morning, Good morning Garytee you and your accomplices there.
Thank you for having me on.
Speaker 1 (00:10):
Yes, sir, you had a large hand in helping develop
what has turned out to be LB one of the
Governor's plan in the special session relative to property taxes.
Lots of opposition coming in in this testimony in front
of the Revenue Committee and some in favor. How do
you see the chances for this thing surviving in anything
(00:31):
like its original form?
Speaker 2 (00:34):
Well, Gary, first off, I'd just like to thank my
co authors Scott Strain and Monique DeVillier. And secondly, we
did not help develop it. This was developed by the
Governor's office. We came in late about eight days ago
that we met with a governor and he asked us
to evaluate the plan, and we indicated we would evaluate
(00:54):
two portions of the plan and that would be first off,
the growth aspects of the plan, In other words, what
is this going to contribute to economic growth? And secondly,
what about the constitution the ras The constitution requires the
state government to provide the funding for k through twelve spending,
so we evaluated that as well.
Speaker 1 (01:15):
All right, you have issues with and Rosie's pointed this
out too, Keith and Nebraska Examiner has a big report
on that this morning about how tip financing might be
impacted and that's a big economic development tool. What do
you think of that issue?
Speaker 2 (01:34):
It is Gary, but we can't base our funding our
tax system based upon these special cutouts and incentives. I'm
not opposed to the incentives, but sometimes they distort the
overall economic growth. And what I was hearing so much
about is, well, we've got to They never talked about growth.
(01:57):
We never talked about growth in terms of tax policy.
We talk about how fair it is and who benefits
and who loses. We were we looked at the growth aspects.
So we found that property taxes are most detrimental to
growth in the state among the states, and Nebraska is
very heavy in terms of property taxes. On the flip side,
(02:18):
sales taxes have the least negative impact on growth, and
Nebraska is very light on sales taxes, so Nebraska can
move some of its tax burdened large portion of it
from property taxes for sales taxes. And that's what we
looked at One.
Speaker 3 (02:32):
Of the arguments Erny that the detractors to Governor Pillon's
plan have barked about is how woefully unfair this is
to the underserved, that poor people are going to get zapped,
and that they are really, really in for it if
this plan passes. Because of all of these new sales
taxes that have come will come off the exempted roles.
(02:55):
I believe that the most of the stuff that will
be taxed and now that loses this exemption wouldn't necessarily
be purchased by the underserved. But what did your research
find about the impact on what you would consider low
income Nebraskans.
Speaker 2 (03:11):
Well, first off, Rosie, we didn't look at that element
of the package. However, we hear all so much about
this that the sales tax that property taxes are less regressive. Well,
I don't find that to be the case. In other words,
both to all taxes are detrimental or negative to growth.
It's just that property taxes more have a heavier impact
(03:32):
on growth than sales taxes, and Nebraska is much more
competitive in sales taxes and less competitive in property taxes.
But nonetheless, to do a treasure or question there that
we didn't look at But I have to say I
don't find that to be what's going to happen. In
other words, the idea that renters don't pay property taxes.
(03:52):
The renters do pay property taxes, and ultimately they pay
many of the other taxes that we and they don't
pay a heavier proportion. The idea that somehow sales taxes
are much more regressive, are much less regressive, are more regressive,
I should say, than property taxes. I don't find that
(04:13):
to be the case.
Speaker 3 (04:13):
Because one of the arguments of the Open Sky Institute,
which is always looking out for undersured people, says as well,
if we cut property taxes, that means that poor people
will have a greater share of their income go to
taxes than people who will own property, of course, ignoring
the fact that most folks who will save on property
taxes will reinvest that and you'll generate significant sales taxes.
(04:34):
But the other thing that is lost in the conversation
is that most of these exemptions will come for manufacturing
and agriculture. And I don't know how many people that
are living at or below the poverty line looking for
an architect, a lawyer, or a CPA, because they will
those services will now be getting taxed.
Speaker 2 (04:56):
But Rosie, the fact is if you reduce taxes in
this this will reduce taxes. The program will reduce taxes.
The fact that a rich person gets more of the
benefits than I do, but we both benefit. That's the question.
In other words, both rich and poor benefit from a
tax reduction. The fact that perhaps a rich get more,
it's just not an argument, it's not a good argument
(05:18):
in my judgment to reject the plan.
Speaker 1 (05:20):
Ernie and your analysis, did you look at the potential
unintended consequences where some of the policies embodied in this
plan could put an undue burden on certain kinds of businesses,
for example, to the point where they may move out
of state. Did you look at it all? But I'm
thinking about some of these taxes, right.
Speaker 2 (05:44):
We did not look at that element of the tax
we had. By the way, Gary, my colleagues and I,
we had eight days to examine this. We met with
the governor about nine days ago, so we examined this issue.
But there is there As I said, all the all
taxes have some negative impacts, and there will be some companies,
(06:04):
some individuals that may move for one reason or the other.
And taxes are part of that movement. I mean, you've
got when I speak in Wyoming, I find that I
got a lot of folks out there that used to
live in Scott's Bluff, you know, and they moved to Wyoming,
they moved to Cheyenne because of the tax burden.
Speaker 3 (06:21):
Well, I would ask and Satader, maybe this is a
question you could answer. You you're more connected to it
than I am. But the syntaxes that he's talking about
are vaping services, cigarettes. I think that that's really the cruck.
Speaker 1 (06:37):
Well, here's the thing, and there are there are craft
brewers are a nice growing industry in the state, and
certainly here in Omaha. You have tobacco shops, so that's
basically that's all they sell. You have vape shops. That's
basically all they sell. And the governor specifically listed those
kinds of businesses. And you're going to get hammered. Well, yeah,
(07:00):
at what point do they say, Okay, I got to
close my doors. That's all.
Speaker 3 (07:03):
Well, And the other question is how many people will
continue to buy cigarettes or buy vaping products even though
there's a significant tax on it. There are still people
buying cigarettes, and there are still people that are buying
these kinds of products. I think he's talking about online
gaming too. Is this going to stop somebody from gambling online?
Speaker 1 (07:24):
I don't know. It's an addictive behavior. Ernie, let's stay
in touch on this. Obviously interesting times there with this
issue in the special session. That's our official economist, doctor
Ernie Goss here on kfab's Morning News
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