Statement of Support for LB 266 Feb. 27, 2013
Chairman Hadley and Members of the Revenue Committee,
My name is Matthew Litt, M-A-T-T-H-E-W L-I-T-T, and I am the Nebraska Deputy State Director of Americans for Prosperity, a free-market advocacy group with over 40,000 members statewide.
We support Senator Chambers’ LB 266 to return the local option sales tax cap to 1.5% because it protects Nebraskans’ hard-earned dollars during these tough economic times.
Nebraskans are taxed enough already. Our state has the 19th most burdensome tax climate in the country according to the Tax Foundation, discouraging prospective residents and business from settling down in the Cornhusker State. Our sales tax alone is the 20th highest among the states, and when collected at the combined rate of 7%, which most Nebraska residents pay, constitutes a tax burden of $1,358 for the typical Nebraska family.
Since the sales tax cap was lifted last year, only Alma and Waterloo have raised their local rate to 2% with a top combined rate of 7.5%. Reversing the cap hike now will not only offer relief to the overtaxed residents of these two cities but also prevent other Nebraskans from sharing their pain in the future. It is not too late to reverse course and return the top rate to 7%.
Now is the worst time for local governments to raise taxes when Nebraska families have already been cutting back. According to the Federal Reserve the typical American family has seen their net worth fall by 37% since 2007. While Nebraska has weathered the national economic storm better than most, nearly 40,000 Nebraskans are still unemployed, home values have fallen and wages remain stagnant but take-home pay has decreased because of the 2013 federal Payroll tax increase.
Nebraska families simply cannot afford to pay a higher sales tax rate at the same time the cost of energy is going up, the cost of education is going up, the cost of health care is going up and over the past three years the majority of residents of our state saw their property tax bill go up and new Occupation taxes imposed.
LB 266 represents a tax benefit of roughly $100 annually for the typical family. BLS (Bureau of Labor Statistics) calculates the average Nebraska family spends $19,400 on purchases applicable to the sales tax. Increasing the sales tax burden by 0.5% represents a tax increase of $97 for the typical family.
We support Sen. Chambers in his effort to repeal a significant tax burden on hard-working families when they can least afford it. $100 is significant money and we believe the needs of Nebraska families outweigh any other interests.