State Sen. Steve Erdman of Bayard testified in favor of Legislative Bill 16 and two constitutional amendments to create and codify the EPIC option consumption tax on Wednesday, July 31, 2024, in Lincoln. Erdman responded to a recent commentary by Jon Cannon, director and lobbyist for the Nebraska Association of County Officials (NACO), who opposed property tax reform efforts.
Erdman noted that during his eight years in the Legislature, NACO never supported any property tax relief legislation he introduced. One of his sponsored bills, the damaged-property bill, allowed property owners to reduce valuation by 20% if their property sustained damage before July 1 of any year. This law saved Nebraska taxpayers millions over six years, yet NACO opposed it, citing potential revenue losses for counties.
Erdman cited research showing the average South Dakota household pays $12,300 annually in all taxes, compared to $16,346 in Nebraska – a 33% higher burden. Cannon argued that property taxes provide stable, locally controlled funding, but Erdman countered that property taxes are mandatory, unlike sales tax, which is voluntary. He also noted that sales tax is collected from those passing through or visiting Nebraska, helping fund government.
Erdman pointed out that the state has removed most community-college funding from property taxes, and those institutions continue to operate with local control. He cited the Nebraska Constitution, Article VII-1, which states, “The Legislature shall provide for the free instruction in the common schools of this state…” Education funding is the state’s responsibility, not property owners.
Erdman also highlighted that property taxes penalize homeowners for unrealized gains, taxing increases in property value even if the property is not sold. In contrast, unrealized gains in a 401(k) are not taxed. He questioned why similar principles should not apply to property.
Cannon warned about volatility in sales and income tax, but Erdman referenced economist Art Laffer, who argued that states relying on sales tax perform better in both good and bad economic times. Erdman agreed that broadening the economic base is a good idea but noted that Cannon offered no plan.
Erdman concluded that the real path to economic growth is eliminating property tax entirely and giving Nebraskans the freedom to decide how much tax they pay and when. He cited data showing that since 1967, Nebraska’s property valuations have increased 400%, while total tax dollars collected have increased 267%, and the mill levy has decreased 46%. Erdman stated that Nebraska’s current property-tax system is broken and requires structural reform.
