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Krusin' the Capitol

By Nebraska State Senator Lowen Kruse

Vol. 2 #10
2002

Hi

We are considering "spreading the base" for sales tax. I got a small education on the base this week.

Ruth took in a couple 20-year-old garments to her tailor friend. I went over to pick them up at the Haymarket. She said there would be no tax on Ruth's jacket, but there would be a sales tax on my trousers. Naturally, I showed more than the usual interest in an apparent sexist abuse of males which might be uncovered.

She said Ruth's jacket was a repair, trying to get it back to a previous condition. Did not work well, but she tried. For my trousers, she said, she had to "manufacture an expansion" on the waist and manufacturing is taxable. To my amazed "But, but..." she replied by pulling a tax code from under the counter and flipping the pages in my face. "It's in there. I had to talk with someone about it."

Well, now that I am trained in law I of course had a response: "My trousers were being returned to their original condition because they originally fit me." Sadly, she is not a lawyer, and simply follows instructions. Can you imagine? I not only have to carefully manage my expansion, but I have to pay taxes on it. Is nothing sacred?

There is little humor in sales taxes, but it will be a VERY interesting discussion as we decide whether to spread the base or raise the rate. Senator Brashear has for years called for spreading sales tax to services. Should it be food or hair cuts or golf lessons? Those illustrations demonstrate the fun of this. Which social class gets taxed?

I find some sexism in the responses. The men on the floor of the legislature say hair cuts are only $10, so no harm. The women say they are out of touch. Then there are nails? The men say we already tax hammers, so why not all kinds of nails. The women say they are REALLY out of touch.

So far we have agreed we will not tax food or car repair, because those load up on low income far more than middle and high income. Spreading the base helps our cities which have a sales tax because they will get more. It also favors car dealers because it does not raise those rates. But what about lawyers and accountants fees, installation of furnaces and other equipment, pop, twinkies, candy, ag supplies, crop dusting, installing camper gear .... Brashear has over 50 items which produce six times what we need. Someone wants to do the pop and twinkies combo, so kids will eat their school lunch and not go to the machines. Well. Are we having fun yet?

I should note a few are saying we should not raise revenue at all. That sounds good, but is a smoke screen. We cut both sales and income taxes two years ago and that is why we are in trouble. We reduced taxes below the need and now have to go back to cover what we can not do in cuts. We have cut $170 million, so should have a net decrease. Our hope is that restoring some of the cuts will not last past two years.

A big personal disappointment for me this week, with the business community. Over my career we have done well together, I have strongly supported economic development, tax incentives, etc. Development has helped my "business," helped North Omaha and helped the state. But this week they would not step up to the plate to help when we have a huge budget problem. Said they could not stand pain, but that state employees and low income people could. So we will have to add over $20 million more to tax increases.

The governor's plan was to delay a portion of the payments on tax incentives, extending the payback period from 8 to 10 years. Man, such a howl. O.K., then come up with another plan. Their answer? Raise sales taxes. DO NOT spread them to lawyers services, just raise them one half cent.

The plan, for me, was quite beside the point. They would not respond to a clearly pro-business governor who was desperately trying to avoid tax increase. I was extremely disappointed. They are better people than that.

In my personal business plan, I spent over $2,000 (two months' salary!) to send a newsletter to voters, which included announcement of four legislative forums on the district. We completed those today, had a total of ten persons. Sigh. Back to the drawing board.

This when taxes are SUPPOSED to be a big issue. They are not for most people. Efficient delivery of services is the biggest issue. I am trying to make future huge tax increases, which are coming but could be greatly reduced, an issue. No luck so far.

We may have to institute bake sales.

Lowen

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