Schumacher: There is no such thing as something for nothing

Schumacher: There is no such thing as something for nothing


When it comes to tax talk “Gilded tombs do worms enfold.” -- Shakespeare

Regardless of whether we talk about tax cuts at the federal, state or local levels, any tax cut always is counterbalanced by something else. There is no such thing as something for nothing.

We are presently hearing a well-honed message from Washington asserting the benefits of tax cutting but conspicuously not talking about what Americans will need to part with in exchange. Lest we repeat the painful experience of having to “pass it to find out what is in it,” it is important for there to be full disclosure, thorough understanding, and careful analysis of the implications of volumes of intricate tax language that carry an estimated price tag of $1.5 trillion. It is indeed fitting and proper that we have an opportunity to contemplate the consequences.

Most likely, those consequences will be: embracing the notion that deficits don’t matter, abandoning forever any hope of a balanced budget, and ultimately cutting Medicare, Social Security, funding for public education and other programs dear to our hearts such as farm subsidies, space programs, health and scientific research and national defense.

Nebraska tax code links to the federal tax code. Federal tax changes have a direct and significant impact on state revenues. The sorry experience of the early 2000s, when federal tax cuts caused Nebraska to face revenue losses exceeding $400 million on top of an already existing budget crunch, is still fairly fresh in memory. The Legislature reduced that revenue loss to $84 million by partially decoupling from the federal tax code but also had to raise taxes and make cuts to key services in order to balance the budget. It is imperative that the impact of dramatic federal tax changes on Nebraska’s already unstable state finances be fully understood and we have sufficient time to offer meaningful input to our federal representatives.

Key state services that receive federal support, such as K-12 education and services for the aged and disabled, would likely be impacted, forcing the Legislature to cut those services, find new revenue sources for them or pass the buck down to local governments, which are primarily funded by property taxes. In fact, the federal proposal as currently structured contains an incentive for states to rely more on property taxes than state income or sales taxes.

Early analysis suggests that the vast majority of the tax cuts will go to the wealthiest. Some low- and middle-income earners may see tax increases and yet many of them are likely to be hardest hit by the service cuts that would come next. At this time, America simply does not know what lies in wait in legislation drafted behind closed doors without broad public input, and that is constantly churned and stampeded toward passage.

It’s also important to keep in mind that federal tax cuts aren’t likely to create enough economic activity to “pay for themselves." In a rare moment of federal candor in 2015, Keith Hall, director of the Congressional Budget Office and a former economic adviser to President George W. Bush acknowledged: “the evidence is that tax cuts do not pay for themselves.”

Our neighbors in Kansas have firsthand experience with tax cuts failing to pay for themselves. That state passed large tax cuts in 2012 and subsequently fell into a drawn-out budget crisis that saw key services like education, roads and corrections ravaged while Kansas’ economy languished. This year, after five years of sustained damage, harsh realities caused Kansas lawmakers to abandon “government by slogan” and reinstate some measure of fiscal sanity.

This began with a truism and now ends with this one: “Haste makes waste.”

State Sen. Paul Schumacher can be reached at 402-471-2715 or


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