By Eric Pool
3/24/2024
For the past year, I have been investigating Senator Erdman’s proposed EPIC option to eliminate property, income, and inheritance taxes for Nebraska citizens. I have read a significant portion of the written text of the law, reviewed the EPIC OPTION material distributed, and attended four different meetings over the past six months in the local area. I have spoken to senator Erdman and EPIC Option spokesperson Mark Bonkiewicz several times. I think we can all agree our tax system here is severely broken.
There are several reasons I support this proposal. The first and most important is that it unhooks the burden of tax from property owners alone. With property tax, you never truly own your property, home, or farm. You lease it, constantly, from the government. With EPIC, the tax is shifted to a consumption base; meaning you pay when you purchase something. If you have a financial emergency or health issues; and your income drops, you can shift around bills and reduce consumption to manage expenses. But the property tax cannot be pushed off, reduced, or negotiated. It’s permanently there, a fixed expense. When you become delinquent; your property becomes subject to fines, penalties, and eventually, seizures. Nobody should ever lose their home, property, or farm to property taxes created by undisciplined government spending.
Eliminating all the taxes (excise taxes on alcohol and cigarettes remain separate and as-is) and moving to a 7.5% tax rate simplifies taxes and allows people to choose how they consume. We are no longer a subject to changes in property valuations, or changes in local levies based on wild swings in government spending. Local governments will be held to disciplined budgeting and spending.
Currently, only about 60% of Nebraskans pay taxes. By moving to consumption tax, all those who are consuming in the economy pay taxes. With EPIC Option, we now have everybody participating in the tax burden. The current sales tax rate in Sidney is 7.5% (5.5% state, 1.5% Sidney, 1/2% Sidney special tax). With that, moving to 7.5% consumption tax would mean people would pay exactly the same rate paid now. The difference is the tax base changes, it taxes consumption on new items purchased. And since all Nebraskans are subject to consumption tax, the tax base is now considerably larger. Business to business transactions are not taxed. Currently if you buy a used car, you pay 7.5%. That goes away with EPIC, as it does not tax used items. Nor does it tax groceries.
People are leaving Nebraska because of crushing property taxes, not sales tax rates. They are shopping out of area from Cheyenne County because of limited selections created by businesses leaving an unfavorable business environment caused by City and County fiscal policies. Voting for EPIC and removing incumbents this election will reverse our economic issues and strengthen Cheyenne County.
The tax base considered for EPIC is estimated at $162 billion. When a 7.5% tax rate is applied ($162b x 7.5%), it generates $11.7 billion in tax revenue; the estimated dollars needed to run all government in Nebraska as of 2025. All political subdivisions will be funded on a five year historical average. The schools in our area will be funded better because the per capita expense for rural areas will be considered when allocating money for schools and transportation.
The top three taxing political subdivisions in Cheyenne county (within Sidney) are Sidney schools ($9.4 million), Cheyenne County ($6.2 million), and the City of Sidney ($2.6 million). Combined they collect approximately $18 million in property taxes. Imagine putting $18 million back into the local economy and letting it circulate. When Bass Pro/Cabela's left, the median income dropped from $69K/yr to $49K/yr. Multiplied times the number of families that left, (2000 jobs were lost and 900 families changed out. $20K x 900= $18 mil) and you would recover nearly the amount of economic buying power that was lost. It would be a huge economic boost for the area and would be a huge step toward the recovery from the Cabela's loss. People can choose to spend, save, invest, or pay down debt. Because of the economic benefits of wages rising and business expansion, plus families and farms with more disposable income; there would be a significant increase economic activity. This money would circulate first within the economy and then the government would take its 7.5%. History has shown that theories such as this, once implemented, generate more tax revenue than fixed taxes because of the increase and dynamics of economic activity.
The overall basic economic theory of this proposal is sound based on previously proven historical performances in our economy. Art Laffer is a well renowned economist who advised President Reagan and President Trump. I am a Reagan republican that believes in limited government and low taxes. Laffer absolutely agrees with Senator Erdman on the theory behind this solution for Nebraska's broken tax system. Is EPIC perfect? No, Its a first step. Senator Erdman stated that tax laws are revised a dozen times a year currently, we can continue to improve on this until it is fair for all of Nebraskans. This proposal gives power back to the people and restores private property rights.
The one important point I also want to highlight is that fact that most of the issues around taxes are caused by overspending. Its not a revenue problem, its a spending problem. No tax system can keep up with overspending. No matter how often you go to the gym, if you overeat, you will continue to gain weight. We need to elect officials that pledge to control and limit spending to levels that compliment our economy, not hinder it.
The vast majority individuals and/or organizations against this proposal are paid lobbyist, Harvard think tanks, and government organizations. That should be a big indication to the voters. The individuals and/or organizations supporting this proposal are real estate developers, business owners, farmers, and everyday property owners who see the benefits of this proposal.
KEY BENEFITS:
Remove tax from property so you truly own it. Restoration of private property rights.
Have all taxpayers participating in the tax burden of the state.
Increased economic activity and strength by putting money (capital) back into the economy to work and grow the economy.
A simplified tax code that eliminates most of the assessor’s branch of local and state government.
