LINCOLN, NEB.(KPTM)-- Nebraska Governor Dave Heineman said it's time to overhaul the state's tax system.
During his state of the state address Tuesday morning, he called for getting rid of individual and corporate income taxes or at least lowering them.
To pay for it, he said he'd end up to $2.4 billion in sales tax exemptions.
"Our entrepreneurs will grow their businesses in Nebraska because they will no longer face the burden of Nebraska being the 35th highest-taxed state on small business," he said during the address.
The Governor says
he wants the state to be able to compete with nearby states Wyoming and South Dakota, neither of which have income taxes.
Governor Heineman didn't say which sales tax exemptions he'd get rid of, but he did say taxing food would be off the table.
Heineman said if the state wipes away half of the current tax exemptions then it wouldn't have to charge individual or corporate income tax.
He said this would create a better business climate that would help small businesses and help citizens by creating better jobs.
One small business owner in Omaha spoke with KPTM on his thoughts of doing away with the income tax.
"In a nutshell, I think it's a great idea that they're trying; however, if you take away state income tax, for most people it's going to be like buying two sacks of groceries maybe in a month's time," said Dick Lerner, co-owner of Bel Air Fashions.
Lerner had a lot of ideas for what would help the state be more business friendly and convince people to move to Nebraska, but he doesn't think the governor's proposal would do it. He said saving money on income tax might make it so he can "buy a few more shirts", but not much else.
"I think there's other avenues they need to touch and it's not shifting one tax from the state income tax back to sales tax, that's going to probably do more damage than it's going to do good because you're going to have less people buying at that point," he said.
Some state senators echoed that thought. State Sen. Jeremy Nordquist said he'd fight any proposal that raises taxes on middle to lower income people.
"Eliminating sales tax exemptions sounds great, but it will have real fiscal and public policy implications," he said.
People on the street did share concerns that taxes could go up on things they buy most.
"Some people really aren't going to be able to afford that little big of difference," said Brian Leek, out shopping with his new baby. "The people with the money, they're going to complain about 'oh I have to pay more' but it probably really isn't going to affect them nearly as much as lower income families."
Others said they're waiting to see what sales tax exemptions the governor will get rid of before making up their mind.
"I guess you would just have to do the math and see if the math made sense, you know? If you end up paying less now for income tax, but you'd pay more for sales tax, then it wouldn't make sense to do it," said Katie Cleveland.