Editorial #39 Property Tax aired January 31, 2019
There will be over 1000 bills introduced in our legislature this term with only a modest handful trying to address the most important and serious issue we have in Nebraska, Property Tax. The seriousness cannot be underestimated and if not addressed immediately, nothing else will really matter as we will have a state with only poor people wanting to live off the government.
Practically every candidate in the past election cycle said they were going to try to fix property taxes but few are really taking it on and none have any new ideas as to what to do. The band aid approach is not working with the bandage now over a foot think. I have attended numerous hearing on proposed tax bills with the dialogue repetitious and testifiers constantly complaining taxes are unbearably high with the only suggestion being that taxes must be lowered.
With 80% of the legislature from urban areas, representing 20% of the state’s land holders, rural senators are reluctant to attack those legislatures opposed to fixing property taxes as it would mean political suicide if they confront their urban colleagues and would be marginalized if they do. With the committee votes a secret, this is hypocrisy at its worst.
In the investing world, the strategy is always to figure out how to deal with bad situations because it takes years to change laws and most would go broke waiting for changes that are favorable to their position. They know when unfavorable or unfair situations exist and they must move their money as soon as possible. The problem with agriculture, it takes years to sell their investment in their farm or ranch and the longer this goes on the less their land is worth and there are few buyers wanting to take on the risk with all the other financial options available.
When the richest people in our state are asked what they would do, they politely say, they would not invest in agriculture land in Nebraska. They know the unfairness of the situation and realize that they are really only renting the land from the state and like a renter, if the rent isn’t paid they are evicted which is exactly what happens if your taxes are not paid.
Farmers and ranchers use land to make their living and it is usually their entire net worth. To be required to pay a percentage of their net worth annually is incredible especially since no one is paying a percentage of their pension, IRA, 401K or their stocks and bond portfolio to the state each year. If property is going to be used to figure out their tax bill, then let’s put all stocks and bonds on the table as well. It then becomes a simple math problem. If this is not an acceptable alternative, then adjust the state income and sales tax formula and eliminate property tax entirely. That is only fair.
There is a petition circulating called the 35% Solution that would hold the legislature’s feet to the fire forcing them to rebate 35% of property taxes paid. This would require the legislature to figure out how to pay the bills along with the Medicaid Expansion that was recently passed. This will not happen until 2020 and I am not sure farmers and ranchers can hang on that long. The taxing of everyone’s net worth or eliminating property tax entirely and raising state income and sales tax are the only options remaining.
In the meantime we should all sign the 35% Solution petition as it is the only option remaining that side steps the political dysfunctionality of the current legislative process, otherwise sell the farm and move to another state as the legislature does not seem to want us here.
This is Keith Kube wishing you the best in making the world a better place.