Nebraska lawmakers slog toward a vote on income, property tax package
LINCOLN, Neb. (AP) - Nebraska lawmakers are working to advance a large, multi-pronged tax package despite concerns that it would send the biggest benefits to high income-earners.
LB-873, which passed 44-0 on Wednesday night, would cut the top personal and corporate income tax rates, create a new tax credit for property owners and accelerate the phase-out of a Social Security income tax that lawmakers approved last year. It advanced Wednesday through the first of three required votes, although some lawmakers said they would push for more changes.
Supporters say the measure would make Nebraska more attractive to seniors and businesses and competitive with its neighboring states.
The Unicam originally had included adjustments to income, social security, and property taxes in its comprehensive tax package addressing altogether but later separated them into individual amendments before consolidating them into AM-2649, which also passed 44-0.
AM-2658, an amendment about income taxes, passed 43-0. If the full tax package passes, the amendment would mean that those in the highest tax bracket would get their state income tax cut by 1% — from 6.84% to 5.84%. It would be phased in by Jan. 1, 2027, affecting individuals making more than $29,000, and married couples who file jointly making more than $58,000.
AM-2660, an amendment about Social Security tax, would remove the state’s tax on that income by Jan 1, 2025. That amendment was not considered, but the language was added into the comprehensive amendment.
AM-2661, an amendment about corporate tax, passed 32-12. If the full tax package passes, the amendment would drop the tax rate on income above $100,000 from 7.5% to 5.84% by Jan. 1, 2027.
2661 was the only one of the amendment to receive no votes, and faced significant voiced opposition.
“I have not seen any studies or evidence that shows (by) decreasing the tax rate more corporations will move to Nebraska or that it will ultimately generate more revenue for the state of Nebraska,” said Sen. John Cavanaugh of Omaha.
Nebraska-based nonpartisan Open Sky Policy Institute estimates the corporate cuts would amount to $75 million annually once fully implemented, while the entire tax cut package would slash $920 million.
“Our modeling finds that about 83 percent of that tax cut is going to out of state corporations,” said Rebecca Firestone, executive director of Open Sky. “So while proponents of this particular cut talk about how this will likely make the state more competitive and will bring businesses into the state, the way our corporate taxes work in Nebraska suggest that’s really not the case, and really most of the cuts will go to out of state corporations who won’t use it as an incentive to come to Nebraska.”
AM-2662, an amendment about property tax, passed 44-0. If the full tax package passes, anyone who pays a community college tax levy will get a refundable tax credit on a portion of what they pay.
”This really represents a package deal on taxes,” said Sen. Tom Briese of Albion. “It’s not perfect but its a compromise... It’s a huge win for Nebraskans.”
AM-2663, another amendment about property taxes, passed 47-0. If the full tax package passes, the tax credit percentage would increase beginning in 2024, from $375 million to $548 million.
Several senators expressed concerns over sustaining programs in the state with such a massive package of cuts. Firestone said those concerns are likely valid.
”That’s 1/5th of the state budget,” Firestone said. “It means cuts in services, it means cuts in K-12 education, it means cuts in higher education, cuts to our support programs, support programs for low and middle income families provided by the state, those are gonna be on the line when this tax program is fully implemented.”
Wednesday was the first of three required votes, and some lawmakers said they would push for more changes as the bill moves forward.
6 News contributed to this report.
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