Members of the Revenue Committee heard testimony Feb. 5 on two bills that would change the state\u2019s current tax system.<\/p>\n
Currently, the income limitation to receive a 100 percent homestead exemption is a maximum household income of $22,500 for a married claimant. Each increase in income, by $1,200 increments, results in a reduction in the exemption by 15 percent. Eligibility ends at a household income of $28,501 for a married claimant.<\/p>\n
The maximum household income for a single claimant to receive a 100 percent homestead exemption is $19,200. Eligibility for a single claimant ends after reaching a household income of $24,201.<\/p>\n
LB986, introduced by the Revenue Committee, would increase from $1,200 to $2,000 the increment by which the exemption is reduced by 10 percent, rather than 15 percent. The bill also would increase the income level at which eligibility would end to $40,501 for a married claimant and $37,201 for a single claimant.<\/p>\n
Committee chairperson Galen Hadley said the proposed adjustment is a primary recommendation of the Tax Modernization Committee.<\/p>\n
\u201cAnytime you make significant changes to a tax system, it will cost significant dollars,\u201d he said. \u201cHowever, we don\u2019t want to have to push the elderly out of their homes because they cannot pay their property taxes.\u201d<\/p>\n
Mark Intermill, representing the American Association of Retired Persons (AARP), supported the bill, saying Nebraska currently has a slightly regressive tax system.<\/p>\n
\u201cTax revenue sources should distribute the tax burden according to people\u2019s ability to pay,\u201d he said. \u201c[Under this bill] there will be more people who qualify for at least partial exemptions.\u201d<\/p>\n
Douglas County Assessor Roger Morrissey also testified in support of the bill. He said last year had the lowest number of approved homestead exemption applicants in the last six years.<\/p>\n
\u201cThis program makes a difference for a lot of seniors and enables them to stay in their homes,\u201d Morrissey said. \u201cThis will definitely help.\u201d<\/p>\n
A hearing also was held on LB987, introduced by the committee, which would index state income tax brackets for inflation. The indexing would be done annually by the state tax commissioner.<\/p>\n
Hadley said the bill represents a true tax cut for Nebraskans.<\/p>\n
\u201cThe state, not the citizens, has benefited greatly in paying bills by not allowing bracket [indexing],\u201d he said. \u201cIf we don\u2019t index, the citizens of Nebraska will lose $35 million in purchasing power.\u201d<\/p>\n
The bill also would reduce the amount of Social Security benefits that are included in the federal adjusted gross income (AGI) for state income tax purposes. The adjustment would apply to taxpayers with an AGI of $58,000 or less for married persons filing jointly and $43,000 or less for all other returns.<\/p>\n
James Cavanaugh, representing the National Organization of Social Security Claimants\u2019 Representatives, testified in support of the bill. He said it is the right time to finally address the issue.<\/p>\n
\u201cThese are not people who will save income from month to month. They spend pretty much their entire income each month,\u201d he said. \u201cIf we allow them some tax relief, they will spend that saved amount each month.\u201d<\/p>\n
OpenSky Policy Institute Executive Director Renee Fry offered neutral testimony on LB987. She said inflation has led to a decrease in taxpayers\u2019 purchasing power.<\/p>\n
\u201cWhile families\u2019 income has grown with inflation, their purchasing power has decreased,\u201d Fry testified. \u201cThis would ensure families pay income taxes proportional with inflation. However, we remain skeptical that now is the time to institute major tax relief.\u201d<\/p>\n
No one testified in opposition to the bills and the committee took no immediate action on them.<\/p>\n","protected":false},"excerpt":{"rendered":"
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