To Sign or Not to Sign - EPIC Option


    To Sign or Not to Sign: EPIC Option

    Over the next few months, Nebraskans may be approached by petitioners asking for signatures in support of the following two Amendments to Nebraska’s Constitution:

    1.     “A Constitutional Amendment to restrict governmental entities in Nebraska to imposing only retail consumption taxes and excise taxes. This amendment will eliminate Nebraska personal and real property taxes; personal and corporate income taxes; sales taxes and inheritance taxes.”

    2.     “A Constitutional Amendment allowing the Legislature to authorize governmental entities to impose consumption taxes on services and new goods with the limitation that only grocery items purchased for off-premises consumption may be exempted from the tax.”

    If the petition gains enough signatures, Nebraskans will have the opportunity to vote on these amendments in November.

    This ballot language introduces the EPIC Option. It calls for overhauling Nebraska’s tax system, striving to make taxes more equitable and affordable. EPIC stands for

                  E – Eliminate

    P – Property taxes

    I – Income and inheritance taxes

    C – Corporate tax

    If the amendments are passed, the Legislature will be required to re-write Nebraska’s tax code, removing all existing state and local taxes, and replacing them with consumption and excise taxes. All state taxes would be paid only on money spent on new goods and services, rather than income or property.

     Many proposals for changing Nebraska’s tax system exist. But EPIC is unique in that it would replace the current system, rather than make changes within it. Why might someone wish to make this change? EPIC proponents give many reasons, but here are two that underlie their belief that our current tax system needs replaced:


    · Property taxes have risen to levels that some property owners are struggling, or unable, to pay.

    · Property taxes, income taxes, and corporate taxes affect the prices of goods and services in ways that the consumer cannot see. The business passes all of these underlying taxes on to the consumer (who then also has to pay sales tax).

    If the petition is successful in adding the amendments to the ballot, and voters approve the amendments, Nebraska will have to make up the money it currently collects in property, income, inheritance, and corporate taxes. For a consumption tax to make up the revenue, Nebraska must increase the tax base. That means that it needs to tax (a) more things, and (b) more people.  The rate will depend on the base.  The larger the base is, the lower the rate can be.

    Because it is impossible to know what the legislature will pass, signers cannot know how this consumption tax will be implemented. However, based on a bill introduced in February 2023 by Senator Steve Erdman and Joel Hunt, Legislative Aide, called LB79/A314, VIP will address the following questions with what is currently being proposed.

    · What would be taxed?

          · Who would be taxed?

          · How much will the consumption tax rate be?

     If the petition gains enough signatures and the Amendments are put on the ballot, VIP will follow up in more depth.


    Based on the ballot language, the only thing permitted to be exempted from the consumption tax is groceries purchased for off-site consumption.

    The key to “what will be taxed” is the word new in “new retail goods and services.” Two principles EPIC tries to uphold are that nothing will be taxed more than one time, or with more than one tax. The following is not an all-inclusive list, but rather examples intended to give a vision of these principles.

     Not taxed:

     · Used homes, cars, and items (such as from thrift or antique stores)

           · Land.

           · Business-to-business expenses.

           · Anything that already has an excise tax.

    o   Gas

    o   Alcohol

    o   Cigarettes

    o   Insurance premiums

             · Insurance claims.

             · Property or services, otherwise taxable, that are used for educational purposes.



    · New homes, cars, and retail items.

          · Vending machine purchases.

          · Internet purchases from out-of-state sellers.

          · Out-of-pocket medical expenses, including copays.

          · Services would be taxed; however, LB79 does not provide a full list of services. LB 79 does mention the following as taxable services:

    o   Real estate agent fees

    o   Financial intermediation and advising

    o   Rentals/leases (of vehicles, electronics, etc)

    o   Transportation

    o   Electrical services

    o   Telecommunications

    o   Gaming (meaning, lottery/other games of chance).


    Everyone who buys new goods and services in Nebraska will pay the consumption tax.

    Besides all private citizens, the tax base will be expanded to organizations. Non-profits, currently tax-exempt, will pay the consumption tax: religious, charitable, scientific, public safety testing, literary, educational, civic duty/social welfare, labor, agricultural/horticultural, chambers of commerce/business leagues/trade associations, and fraternal societies.

    According to LB79, governmental entities will also be charged the consumption tax: local, state, and federal. (Note: Some analysts question the legality of taxing federal purchases; this is one piece of many that is being worked out.)


    To replace the revenue, LB79 would impose a consumption tax “of seven and one-half percent until changed by the legislature.” 

    This, however, is one of many estimates. Several organizations have done studies or analyses to estimate the needed rate. Their results range from 7.23%, from the Beacon Hill Institute Study commissioned by the Consumption Tax Institute, to 22.1%, in a policy brief done by OpenSky Policy Institute, which is a response to the Beacon Hill Study. Covering the range in between are estimates by the Platte Institute, the Nebraska Chamber of Commerce, and the Nebraska Realtor’s Association.

    Differences exist for several reasons:

          · Various analyses calculate the tax base with different methods.

          · Analysts interpret the ballot language and the language of LB79 in different ways, thereby coming up with different tax bases.

          · Beacon Hill uses a dynamic model which predicts ways in which the economy will improve, which increases its projected tax base.

    VIP has reviewed both the Beacon Hill and Open Sky studies. Though these studies have arrived at very different rates, their analyses both use LB79 and much of the same dataset as a basis. Their primary differences arise from what they include in the tax base under their interpretations of LB79. Because these groups and others continue to study EPIC and intend to provide more material in the future, and because amendments to LB79 are still being considered, we did not find it practical to present a full comparison at this time. Should the petition be successful in putting EPIC on the ballot, we hope to provide a more detailed comparison of these and perhaps other analyses.


    It is important to keep in mind that it is impossible to know what the Legislature will pass if these Amendments make it on to the ballot and the voters approve them. As such, what is presented here may or may not reflect what would happen. However, hopefully this framework will give voters a basis for weighing whether to sign or not to sign.

    Acknowledgements: Thanks to Joel Hunt, Legislative Aid; Rob Rohrbough, of the Consumption Tax Institute; and Todd Henrichs, Communications Director at Open Sky Institute, for their input and review.


    Research and writing by Vickie Hecker

    Vickie is a state employee, but her postings on this site do not speak for the views of the state, its customers, clients, suppliers, or employees. Any links to state sites are provided for informational purposes only.