{"id":20775,"date":"2017-02-16T15:12:39","date_gmt":"2017-02-16T21:12:39","guid":{"rendered":"http:\/\/update.legislature.ne.gov\/?p=20775"},"modified":"2017-02-16T15:12:39","modified_gmt":"2017-02-16T21:12:39","slug":"bill-would-change-tax-brackets-rates-and-end-some-exemptions","status":"publish","type":"post","link":"https:\/\/update.legislature.ne.gov\/?p=20775","title":{"rendered":"Bill would change tax brackets, rates and end some exemptions"},"content":{"rendered":"

The Revenue Committee heard testimony Feb. 15 on a bill that would restructure the state\u2019s income tax brackets and expand the sales tax base.<\/p>\n

\"\"
Sen. Brett Lindstrom<\/figcaption><\/figure>\n

LB452, sponsored by Omaha Sen. Brett Lindstrom, would eliminate the lowest income tax bracket and gradually reduce the top income tax rate beginning with the 2018 tax year. The current top tax rate of 6.84 percent would be reduced annually through 2025 until that rate is reduced 5.99 percent.<\/p>\n

Lindstrom said reducing personal and corporate income taxes is an important first step in providing broader tax relief.<\/p>\n

\u201cWe [would] collapse the tax brackets to help out working families and give the majority of Nebraskans income tax relief,\u201d he said. \u201cLB452 should be part of a comprehensive package and a prudent step forward with triggers to achieve tax relief.\u201d<\/p>\n

Under the bill, the Tax Rate Review Committee would be directed to examine the expected rate of revenue growth each year, beginning in 2019. If the expected rate of growth does not exceed 3.5 percent, any reductions in the top tax rate would be deferred. Such a deferral would remain in effect until the expected rate of growth exceeds 4.2 percent.<\/p>\n

LB452 also would create one single corporate income tax rate of 7.58 percent. It similarly would be reduced each year through 2025 until that rate is 5.99 percent. Reductions in the corporate tax rate likewise would be subject to the expected rate of growth limitations placed on the income tax rate reductions.<\/p>\n

The personal exemption credit would be reduced incrementally based upon federal adjusted gross income (AGI) for single, head of household and married, filing separately as follows:
\n\u2022 10 percent if AGI is greater than or equal to $75,000 but less than $85,000;
\n\u2022 20 percent if AGI is greater than or equal to $85,000 but less than $95,000;
\n\u2022 30 percent if AGI is greater than or equal to $95,000 but less than $105,000;
\n\u2022 50 percent if AGI is greater than or equal to $105,000 but less than $115,000;
\n\u2022 75 percent if AGI is greater than or equal to $115,000 but less than $125,000; and
\n\u2022 100 percent if AGI is greater than $125,000.<\/p>\n

For married filing jointly, the phase-out percentages remain the same but the AGI thresholds are double the amounts listed for the other filing statuses.<\/p>\n

The bill also would impose sales and use tax on services including:
\n\u2022 storage and moving services;
\n\u2022 personal care services including hair care, hair removal, massage, nail care, skin care, tanning, tattoos, other body modifications and other beauty and personal care services;
\n\u2022 local taxi, limousine or other luxury vehicle services and any other local ground transportation services provided by motor vehicle;
\n\u2022 dry cleaning and other laundry services, including coin-operated machines used for dry cleaning or other laundry services; and
\n\u2022 newspapers and lottery tickets.<\/p>\n

Jim Vokal, chief executive officer for the Platte Institute, testified in support of the bill. He said it would simplify and unify the state income tax system and create a standard tax rate for all businesses in Nebraska.<\/p>\n

Sales tax exemptions for services have become outdated as the economy has transitioned from a goods to service-based economy, Vokal said.<\/p>\n

\u201cToday we have an increasingly service-based economy and the sales tax code needs to be updated to reflect this change,\u201d Vokal said. \u201cLB452 provides many tools for building a tax system in Nebraska that provides needed revenue and can help remove barriers to economic growth.\u201d<\/p>\n

Renee Fry, executive director of the OpenSky Policy Institute, opposed the bill, saying the proposed tax cuts would provide very little relief to most Nebraskans and large tax cuts for the wealthiest citizens.<\/p>\n

\u201cNebraska earners who make between $43,000 and $67,000 would see an average annual tax cut of $14,\u201d she said. \u201cOn the other hand, the wealthiest 1 percent of Nebraskans \u2014 those who make more than $509,000 annually \u2014 would receive average tax cuts of $5,381.\u201d<\/p>\n

Representing the Nebraska Board of Massage Therapy, Steve Carper opposed LB452, saying that categorizing massage therapy as a personal care service is inaccurate. Massage therapy is not only a luxury service, but a form of healthcare for many people, he said.<\/p>\n

\u201cWe do not feel massage therapy should be taxed as a personal care service because it really belongs in the category of alternative and complimentary medicine,\u201d he said. \u201cImposing a tax on massage therapy would be doing a disservice to the clients who rely on those services for pain relief.\u201d<\/p>\n

Opposing the tax on lottery tickets was Chris Kircher, chairman of the Nebraska State Fair Board. Taxing lottery tickets could lead to declining sales, which in turn would lead to declining funding for the state fair, he said.<\/p>\n

\u201cA tax on lottery ticket sales will seriously damage our ability to continue providing a first rate event that Nebraskans have come to expect,\u201d he said. \u201cIt could lead to a possible rise in ticket prices that won\u2019t allow all Nebraskans to attend the fair.<\/p>\n

The committee took no immediate action on the bill.<\/p>\n","protected":false},"excerpt":{"rendered":"

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