Explaining the Consumption Tax

They Will Lie to Prevent Change

I had submitted much of this to the Nebraska Examiner but they had no questions. Also, I deemed my input needed some fine-tuning. At the same time, KFAB has allowed naysayers to provide false information to the public. Yet, the Bacon Hill study provides proof a consumption tax can and will work (https://epicconsumptiontax.org/bhi-study).

As the EPIC Option consumption tax is being proposed for Nebraska, many are confused. All I ask of you is to maintain an open mind and not become an incessant naysayer.

I have listened to the local naysayers, but they are often part of organizations which depend on donations from donors who receive tax deductions from the existing tax structure. These naysayers have a conflict of interest when they oppose the EPIC option consumption tax and are not beyond lying.

There are two distinct features to understand. The consumption tax is based on your ability to pay and is transparent. Changing over to a consumption tax will involve trade-offs but understanding such trade-offs may be difficult to understand. Currently, many taxes are hidden, and are indirect, yet impact us even when we have the lack of ability to pay.

Many local economists do not fully appreciate Nebraska’s tax problem. Nebraska’s economy has shifted greatly to a service and digital economy which often avoids taxation. However, the property tax system is based on the assumption of everyone being a farmer or owning a for-profit business. Over time, Nebraska has changed to a service economy but this has not been addressed. Critics often fail to factor in the size of the service economy which is largely untaxed. However, the problems with the annual property tax system led to the creation of the income and sales taxes during the 1960s which have their own distinct problems. All of these tax systems resulted in numerous exemptions due to decades of lobbying from special interest groups.

Thirty years ago, you would buy a camera and film, and a flash cube as well as a battery. You would take the film to a photo shop, such as Fox Photo, to develop the film and wait for developed pictures. You may have cut out a coupon from a paper version of the Omaha World-Herald to lower your expenses. As for portable lights, you would have bought a flashlight, batteries, and perhaps an extra light bulb. If the batteries rotted, you might buy a new flashlight. As for phones, there was AT&T and if you wanted voice messages, you bought a separate device to record your calls. Today, this is all done with a smartphone, which you plug in to charge. Yet, Nebraska tax systems have failed to adjust.

Many merely want to fix or adjust the current system but every fix creates more problems as the base problem, property taxes, still exists. The annual property tax discourages businesses and homeowners, and in many ways, is grossly unfair. In fact, some organizations blazingly display bronze statues when they are exempt from the annual property taxes. The time has come to bring in a new system. Will it be perfect? Probably not but we should not let perfection become the enemy of the good. The current tax system is the worst of the worst.

Some say the consumption tax will hurt the poor, or is regressive. This is not true. Used items, such as clothes and cars, are not taxed. Only new items are taxed. Some have complained this would hurt new and home sales but it is important to understand the consumption tax is a one-time tax, not an annual tax such as the annual property tax. In addition, used items will incur maintenance costs.

Landlords would not have to pay annual property taxes and would have more funds to improve their units and be able to keep rents lower. Right now, any property evaluation can force landlords to increase rents, particularly if they are renting out homes. In addition, many people on home mortgages have no idea of how much they are paying into the annual property tax but eliminating this tax will allow them to own their home sooner or make their mortgage payments lower.

Free of the annual property taxes, homeowners and businesses will invest and use the funds to improve their lives. Many homeowners will use the freed-up funds to maintain their homes and in doing so will make many purchases of services and products. Car owners will have the funds to detail their cars and as well as maintain them. These new purchases will pay the consumption tax.

To the smart naysayers out there, I offer a simple challenge. Take your property evaluation, and divide it by 100 (this has been corrected from a previous typo). The number you arrive at should be the maximum amount you should pay in annual property taxes because of the mill levy system. If you are like most Nebraskans, your annual property taxes exceed this figure by about 30 percent. Ideally, your property tax should not exceed the evaluation when divided by 1,000, which results in a much smaller number. The excessive amount obstructs the ability of homeowners to maintain their homes and prevents the Nebraska economy from achieving maximum prosperity for all. It encourages downsizing, homelessness, and migration out of Nebraska.

Those who defend the current taxation system are going to have to figure out how to make city and county governments and public schools less dependent on the annual property tax system. I can understand if they defend income and sales tax, but as for the annual property tax system, why would anyone invent it in the first place? It no longer serves the economic interests of Nebraska. So, if nothing else, let us debate.

For more information about consumption taxes and the EPIC option, see the links below:

https://epicoption.org

https://epicconsumptiontax.org

Buy publicity items at: https://express-signs.com/shop/ols/categories/epic-option