Jim Vokal’s Errors
Jim Vokal is CEO of the Nebraska Platte Institute (https://platteinstitute.org/) and wrote two articles to the Nebraska Examiner on taxation His first take was on principles of good tax policy such as simplicity and transparency (https://nebraskaexaminer.com/2024/05/22/principles-of-good-tax-policy/).
But the second article claims fundamental property tax relief is easy and within reach (https://nebraskaexaminer.com/2024/05/23/foundational-property-tax-relief-is-within-our-reach/). Yet within seconds of reading his article, he violates the principles of the first article on simplicity and transparency. Property tax relief is a farce. Property taxes are like an annual hail storm of golf-size proportions hitting home properties once a year. The damage and obstruction to maintaining a home is severe.
Yet, Vokal defends the current property tax which is neither simple nor transparent, and is destructive of property rights. Instead of abolishing property taxes, he calls for a “hard cap on property tax” based supposedly on 3 percent growth or inflation, whichever is higher, which is merely an exemption to the hard cap he advocates. Even if the idea could be implemented, the lobbyists would eventually destroy any effectiveness of such caps, as they have already done with the existing tax codes.
Vokal states “Only voters should approve an ordinance to exceed the hard cap through a popular referendum – the ultimate act of local control.” This is flat out false. Most taxing boards have already figured out ways around such restrictions, including bond issues and tax levies. Apparently, Vokal has not paid much attention to local politics and how these boards operate. In addition, the property taxpayers are a voting minority so this is not helpful to the degree his idealism envisions. Shifting to a consumption taxes would democratize taxation as far more would see what they pay government to do.
Vokal’s next take is to call for a rollback on any additional tax gained from increased property valuations. This is actually not workable because many valuations are justifiable due to new construction. The reason many tax entities do not lower mill levies is the difficulty in determining property tax revenue income when evaluations vary from year to year. Vokal’s approach is to put a nice cherry on top of manure to make the manure taste better. But, it still manure. Put a plant seed in it instead. Don’t eat it.
Vokal also proposes “truth in taxation transparency”, but he again, thinks everyone sees their property tax bills, but they don’t. With home mortgages, many are in the dark about how badly Nebraska property taxes are eating into their equity and home investments as mortgage companies rarely share this information and homeowners do not think to check. In addition, renters are not aware of how property taxes impact rents. Landlords do not contest property tax hikes and merely past them on to the renters. Landlords are not required to disclose to renters how much of their rent covers property taxes. At the same time, renters, unfamiliar with property taxes, end up voting in favor of bond issues and higher tax levies resulting in higher property taxes.
Next, Vokal supports 1107 income tax credit on school property taxes. I like these tax credits but this tax credit is not as much of a benefit as it first appears and the same can be said of other state provided tax credits. There is an internal cap on the amount of refund. In addition, your tax preparer may charge you for the extra work. But the biggest flaw in these programs is they encourage tax entities to spend more as these tax credits take pressure off of them in taxing more.
Perhaps, Adam Weinberg, an associate of the Platte Institute, who silently exited the organization without any sincere explanation of why he left or where he was going, already knew Vokal was not being fully truthful with the public about taxation. A lot of us tax-policy observing folks noticed and missed him. Weinberg understood economics well, but now, no one seems to know where he went.
So why the opposition to EPIC consumption tax? I suspect the reason is many manufacturers in Nebraska fear consumption tax will become a value-added tax a Vokal eludes to, which is a tiered consumption tax. This is not what the EPIC option consumption tax is but some fear value-added taxes is what would result. However, the value added tax, while not a part of the proposal, is not uncommon in the world (https://www.investopedia.com/terms/v/valueaddedtax.asp and https://taxfoundation.org/blog/pros-cons-value-added-tax-vat/ and https://taxfoundation.org/blog/how-many-countries-world-have-value-added-tax/).
Yet, every consumption tax has one major advantage over all other means of taxation; it is all based on the ability of the individual to pay and done so anonymously. So if we are to have taxes, let them be consumption taxes.