The state inheritance tax was the focus of two bills heard by the Revenue Committee Feb. 20.
LB960, introduced by Holdrege Sen. Tom Carlson, would reduce the amount of inheritance tax levied on descendants. Under the bill, the tax for lineal descendants would be decreased from 13 to 7 percent. All other inheritance would be taxed at 9 percent, down from the current level of 18 percent.
The committee also heard testimony on LB812, a bill brought by North Platte Sen. Tom Hansen that would eliminate the state inheritance tax effective Jan. 1, 2015.
Carlson said the current inheritance tax rates are too high to be justifiable.
“I’ve heard opposition to this bill from counties, including my own,” he said “[This bill represents] a fair compromise on both sides of the question.”
Dick Clark, director of research for the Platte Institute for Economic Research, supported both bills, saying that the inheritance tax places an undue burden on agricultural families.
“This represents an additional layer of taxation on top of what should be simple generational transfers of land,” he said. “It makes it very difficult to pass property from one generation to the next.”
OpenSky Policy Institute Executive Director Renee Fry opposed the bills, saying it would remove a vital funding source for counties.
“This bill would deprive counties of one of their very few revenue sources,” she said. “Counties would have to increase property tax levies, on average, 7 percent to make up lost revenue.”
The committee took no immediate action on the bills.