With policymakers in Nebraska considering a significant shift from property taxes to sales taxes, two tax policy experts shared insights on the concept of “ability to pay” and discussed the implications of raising the sales tax for Nebraska taxpayers, Nebraska businesses and state revenues.

A panelist on Tuesday’s webinar, Richard Auxier, senior policy associate in the Urban-Brookings Tax Policy Center, discussed regressive and progressive tax types, and why sales taxes, specifically, eat up a larger share of income for low-wage Nebraskans.

“Lower-income Nebraskans have to spend all of their income to just keep up with costs,” said Auxier, who studies state and local tax policy across the U.S. “Higher-income households, they save a lot of their money and they invest a lot of their money, so it’s not exposed to the tax. So their share is far, far lower.”

Part of the Governor’s plan to reduce the amount of revenue collected through the property tax includes proposals to raise the state sales tax rate from 5.5% to 6.5% and to include more services in the state’s sales tax base.

Led by the Nebraska Chamber of Commerce, business groups have opposed removing exemptions for business inputs, noting how added costs to businesses generally get passed along to the final consumer, raising what everyone pays.

Panelist Stacy Watson, a Tax and Consulting Shareholder at Lutz and chair of the Nebraska Chamber of Commerce’s Taxation Council, said that’s what she hears from the businesses which she works with.

“As you expand the base and include these services and include these business inputs, and you increase the rate, we’re ultimately raising costs to the consumer,” Watson said. “Business profits aren’t necessarily going to go down. They’re just going to increase what they are charging the next person to help cover these taxes.”

The Chamber, Watson said, is concerned with encouraging economic growth in Nebraska, and increasing what it costs to purchase necessities like the car you drive to work, the clothes you wear and the supplies your children need for school can discourage young families from relocating here.

Throughout the Legislative session, OpenSky will provide additional research and analysis on proposed tax policy changes in Nebraska as more details emerge.