Friday, November 11, 1966
The Daily Nebraskan
Page 5
Economist Defends
Income Tax Defeat
By Cheryl Tritt
Junior Staff Writer
The defeat of the pro
posed state income tax in
the Nov. 8 election "is not
necessarily a condemnation
of this specific amendment
or of a state income tax in
general," according to E.
B. Schmidt, University pro
fessor of economics.
"No doubt there were
many voters who simply did
not favor this form of taxa
tion, but I am convinced
many persons voted against
the income tax so the Uni
cameral could start from
scratch to enact a com
pletely revised tax system,"
Schmidt said.
After questioning people
from all over the state, I
believe the majority of the
citizens want a combined
Income and sales tax,
Schmidt added.
No Panic
Because both the income
tax and property tax were
defeated in the election, the
state's economic situation
is critical Schmid said, but
there is no reason for pan
ic. The state will be collect
ing revenue from the prop
erty taxes whi ch were
levied this fall until Sept. 1,
1967.
Personal property taxes
will be delinquent Dec. 1
and the first payments of
the real estate taxes won't
be delinquent until May 1,
19G7. The last real estate
payments will be due Sept.
1, 1967.
Therefore the state will
be able to operate on t h e
money from the property
taxes for another year,
Schmidt explained. Other
forms of taxation such as
cigarette, liquor, inheri
tence and local property
taxes are still in effect.
Forced To Decide
However, the Unicameral
is forced to decide upon a
new tax system at its next
session, Schmidt said, and
the system should be for
mulated by next July or
August.
Schmidt noted that the
legislature could probably
enac J3797, the defeated
income tax bill, combined
with a sales tax without
having the act stymied by a
petition drive or the courts.
The vetoed income tax
bill suggested the tax be
levied on a flat rate basis,
incorporating the State
Board of Equalization to
compute the percentage
rate by means of a formu
la. Advantages Outweigh
The advantages of the
low flat rate taxation out
weigh those of a graduated
income tax method,
Schmidt said. The main ob
jectors to the flat rate in
come tax maintain this
m'hod is regressive but
this isn't true, he added.
"inere are two ways of
making a tax progressive,"
Schmidt explained, "o n e
way is a graduated tax and
the other way is incorporat
ing u n i f o r m exemptions.
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'FASHION LEADERSHIP FROM AMERICA'S FAMOUS SHIRTBUILDERS AT FINER CAMPUS STORES EVERYWHERE
The proposed income tax
had uniform exemptions,"
he added.
Schmidt said that with
uniform exemptions each
dependent in a family would
receive a $600 exemption
regardless of his income.
As an example he ex
plained that a family of
four with an income of
1 Xi 3
Schmidt
$2,200 would not pay any in
come tax because its ex
emptions would total $2,400.
However, another family
of four with an income of
$12,000 would still receive
exemptions totaling $2,400
but they would than pay a
flat rate tax on the differ
ence, Schmidt stated.
Situation Improved
Schmidt noted that the
tax situation could have
been improved if the prop
erty tax had been retained
to a limited extent.
First, building projects
would be more readily fi
nanced with a property tax
as a source of revenue rath
er than other sources.
"Secondly, we can't es
cape having the state
equalize, assessments as
long as ' we tax utilities,"
Schmidt said.
Last, if the state begins
giving aid to public educa
tion, it must use assessed
valuations to determine
fairly how much aid indi
vidual school district will
receive.
Earmark Opposition
Schmidt said he believed
the main reason Amend
ment 14, allocating at least ,
20 percent of tax proceeds
to public schools, was de
feated was because the vot
ers were opposed to ear
marking. Earmarking is
setting aside a certain per
centage of the proceeds
from taxes for some desiv
nated purpose.
He added that the citizens
probably wish to let the leg
islature decide what per
centage of taxes should be
allocated to the school sys
tems. Schmidt added that the
state could afford to in
crease its spending. "My
computations show if t h e
state did increase its tax
collections to approximate
ly $117 million, Nebraska
would be on a level with
the vast majority of the
neighboring state s," he
said.
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Week
GOP Gains
Republicans cap
tured House seats in every
section of the country Tues
day, but particularly in
the Midwest, where their
1964 losses were heaviest.
Their apparent gain was
47 seats, which could cost
the Administration effective
working control of the
House.
The ranks of the 44 fresh
man Democrats elected to
GOP seats two years ago,
who frequently provided the
Administration with the
margin of victory in the
last Congress, were badly
broken.
Peking Chicled For Blocking Red Unity
Soviet Communist Party chief Leo
nid I. Brezhnev has blamed Peking again
for blocking a Communist united front on
Viet Nam.
But Breshnev's speech to a rally in
Tiflis was bis first major statement in
more than a year and a half in which
he failed tc set out any of the Krem
lin's conditions for an end to the Viet
Nam war.
Western observers in Moscow saw it
as the latest indication that there might
be some fluidity in the Soviet position
now.
They pointed out that top-level Krem
lin speeches in the last three weeks have
omitted the Soviet Union's long-standing
demand for American troop withdrawals
and failed to report support for Hanoi's
Europe Gains Confidence
The Western alliance is emerging with
new confidence from the crisis of the last
several months.
Two new psychological gains for NATO
now are apparent according to roving
Ambassador W. Averell Harriman's re
port to the North Atlantic Council.
European fears that the United States
will drift into a war against Communist
China and perhaps drag Europe in have
declined recently.
European fears that the American
commitment in Southeast Asia would
cause it to lose interest in its European
commitment seem to have passed.
Harriman also told the council that
the Manila meeting had reached full
agreement on the limited objectives which
the United States has been pursuing in
Viet Nam.
He said that the United States was not
in Viet Nam as an Asian power. He said
that the United States is both an Atlan
tic and a Pacific power and is interested
in both Europe and Asia.
Mr. Harriman declared that the Unit
ed States has the "will and the means
to fill our commitments in Europe." while
checking aggression in Viet Nam.
DeGaulle in 1966 had tried to force
a division between (1) the alliance as
City, State, National, World 1
In Review
Thin Democratic Margin
The Democrats next year
will have a numerical ma
jority in the House, about
a 60-seat edge. But that
advantage could disappear
when Republicans and con
servative Democrats put
their heads and votes to
gether. The Republicans made
even more impressive gains
in Nebraska, sweeping all
the major contests. In one
of the more closely watched
races, incumbent U.S. Sen
ator Carl Curtis gained an
impressive victory over
Democrat Frank B. Mor
four-point "peace plan" which also calls
for a United States pull-out.
He said Peking's unwillingness to co
ordinate action with other Communist
countries in Viet Nam was "of great
importance for the entire cause of the
liberation struggle of the Vietnamese peo
ple." v
The Soviet leaders' recent failure to
refer to conditions for ending the Viet
Nam war except in the most general
terms has sparked intense speculation in
diplomatic circles in Moscow.
It has led to a vague impression that
Russia may be looking for a way put. The
Soviet press has also toned down the vi
triol in its anti-American attacks.
The Christian Science Monitor
set up in the North Atlantic Treaty and
(2) the North Atlantic Treaty Organiza
tion. DeGaulle said that France could re
main a member of the Western alliance,
but he wanted to see NATO dismantled.
If it were not, France would withdraw.
The smaller nations stood firm along
with the larger ones. NATO remains in
tact except for the absence of France.
France's absence leaves a big gap in
NATO supply and communication lines
but it does not prevent the alliance from
pushing ahead toward needed new goals.
At the moment NATO is engaged in
extensive housekeeping changes. These
tend to stress its problems more than its
progress.
But alliance leaders are already en
gaged In matters beyond the relocation
of NATO bases. These concern new poli
tical directions for the alliance as well
as new military planning.
One of the biggest political changes
to overtake NATO in more than 15 years
is that it now aims to improve peace
time relations with countries which have
been regarded as the possible source of
aggression.
The Christian Science Monitor
rison, who after three terms
left the statehouse in an at
tempt to gain a scat in the
Senate.
In the race for governor,
Norbert T. Tiemann won by
comfortable margin over
his Democratic opponent
Phillip Sorenson. Robert
Denney, an underdog, edged
Incumbent Democrat Clair
C a 1 1 a n in the contest for
the First District's seat in
the House. Rounding out
the sweep, John E. E v e r
road won the lieutenant
governor's position over
Democrat Ross Rassmus-sen.
In NATO
Rpnpal
Forms
Repealing both the state
income and property taxes
in Tuesday's election was
"an irrational act of p r o
test" on the part of Nebras
kans, according to Dr. A.
B. Winter, associate pro
fessor of political science.
"It is comparable to some
of the more recent types
of demonstrations of one
kind or another, that have
been occuring throughout
the U.S.," Winter stressed.
He based his conclusion on
News
Outlook
three factors. The first is
that "the labor unions have
consistently opposed income
tax and because Omaha
has the largest percentage
of the union population in
the state, the results should
show that Omaha voted
against the income tax."
"In addition there is
strong sentiment in Omaha
against any change in the
tax structure because its
position as a retail merchant
market would be hurt,"
Winter explained.
"The city would oppose a
sales tax because it would
probably lose the Iowa
shoppers that cross the
river to shop in Omaha.
This is because Iowa has a
sales tax," he continued.
Winter stated there is not
enough available data com
piled yet to make a thorough
analysis of the entire state's
voting on the basis of geo
graphy. A second consideration is
the fact that many voters be
lieved that it was the legis
lature as a group that put
the income tax measure on
the ballot, Winter said.
"This is not correct. The
income tax measure was
placed on the ballot because
over 10 of the voters of
the state petitioned to have
it on the ballot," he stated.
Those legislators who
moved to place LB 797 on
the ballot are only a small
portion of the total legisla
ture, Winter emphasized.
"Therefore some people
voted against it because
they thought they were
slapping the legislature for
not deciding on the tax bill
itself, 'he said. "This is ir
responsibility because the
legislature was not that ef
fective in placing the bill on
the ballot."
Winter stated that the
majority of the people vot
ing against the property tax
were rural voters who fol
lowed the leadership of the
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Nebraska Farm Bureau
Federation.
"The city opposition to
the property tax was prob
ably a result of the voters
being misinformed. They
were ignorant of the mean
ing of number 301, they
felt that they would not
only abolish the property
tax but also that of t h e
city, local, and school tax
jurisdiction, which are
based on property v a 1
uations," Winter-said.
The third factor behind
the defeat of both tax pro
posals, according to Win
ter, was that many Nebras
ka voters voted no on 300
and yes on 301 simply be
cause they were disgusted
with the way the state gov
ernment has been dealing
with the Nebraska tax struc
ture. "This feeling can be par
alleled in the French peas
ant who votes for the Com-
Dr. Winters
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Wednesday, Nov. 16th
Protest '
munist party candidates,
even though the peasant is
probably the most conserva
tive and thrifty person in
all of Western civilization,"
he continued.
"The French peasants,
like the Nebraskan, in this
case votes the way he does
because he is dissatisfied
and frustrated with govern
ment policies," Winter said.
Winter stated that he did
not know whether or not a
special session of the Ne
braska legislature would be
called. However, he did
declare that if he were
governor of the state, he
would call a session to deal
with the tax problem.
Winter pointed out the
fact that t h e legislature
could only pass an income
or sales tax, or a combin
ation. This is because there
is a provision in the con
stitution that says that
a Constitutional amendment
can not be submitted by in
itiative petition more often
than once every three years.
"Therefore, the legisla
ture would have to wait
three years if it wants to
repeal amendment 301 (pro
perty tax) by initiative pe
tition," Winter explained.
"It is the people's fault,
not that of the legislature,
that the income tax got on
the ballot by a referendum.
Nor is it the fault of the
legislature that the question
of repealing the property
tax was put to the voter.
This was done under the
leadership of the Nebraska
farm Bureau Federa
tion," he said.
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