Governor’s tax cut plan considered

A bill that would reduce income taxes and eliminate the inheritance tax was discussed in a hearing of the Revenue Committee Jan. 26.

LB970, introduced by Bellevue Sen. Abbie Cornett on behalf of Gov. Dave Heineman, would alter the current state tax structure by:
• reducing individual state income tax rates and expanding income brackets;
• reducing the top corporate income tax rate from 7.81 percent to 6.7 percent; and
• eliminating the inheritance tax.

In 2007, Nebraska repealed the estate tax, which was imposed upon a person’s assets after his or her death. The remaining inheritance tax is imposed on beneficiaries of those assets. Nebraska is one of eight states with an inheritance tax.

Cornett said the bill would ease financial strain for families and help the state bring in new business.

“This bill will allow a family of four to save for their kids’ education or pay off bills,” Cornett said. “This bill will add jobs and make Nebraska competitive.”

Gov. Heineman testified in support of the bill, saying it would address a tax system that currently is unfair to the middle class. He added that the tax cuts would not come at the expense of providing important services.

“Some will argue that we can’t afford this plan,” Heineman said. “I am convinced we can still prioritize education and job creation and have this tax relief.”

The elimination of the inheritance tax was the primary focus of opposition.

Larry Dix, executive director of the Nebraska Association of County Officials, opposed the bill. He said the mandates placed on county governments by the Legislature are unrealistic if tax revenues continue to decrease, given the cut in state aid to counties in 2011.

Mary Ann Borgeson, Douglas County Board Commissioner, agreed that raising property taxes would be inevitable if the bill were passed.

“If the county loses this revenue and continues to provide state-mandated services, we would have no option but to increase property tax by 8 to 11 percent,” Borgeson said.

The committee took no immediate action on the bill.