Low- and middle-income Nebraskans would see a modest tax reduction under a bill advanced from general file March 20.<\/p>\n
LB970, introduced by Bellevue Sen. Abbie Cornett at the request of the Gov. Dave Heineman, originally would have eliminated the inheritance tax and reduced both corporate and individual income taxes. The bill was estimated to reduce revenue for the state by $326.6 million. Additionally, counties would have lost approximately $43 million in annual revenue with the elimination of the inheritance tax.<\/p>\n
After much debate over whether the state could afford to offer tax cuts in light of a projected revenue shortfall of $461 million at the end of the next biennium, the Revenue Committee advanced a committee amendment that attempted to lessen the fiscal impact of the governor\u2019s proposal. Adopted 35-4, the amendment eliminated the bill\u2019s provisions relating to the inheritance tax and corporate income tax.<\/p>\n
Remaining in the proposal was a gradual income tax reduction, reducing the bill\u2019s fiscal impact over the three-year period from a projected $326.6 million to $148.2 million, with the following initial rates:
\n\u2022 2.45 percent for an individual making up to $2,400 or a married couple making up to $4,800;
\n\u2022 3.5 percent for an individual making between $2,400 and $17,500 or a married couple making between $4,800 and $35,000;
\n\u2022 5 percent for an individual making between $17,500 and $27,000 or a married couple making between $35,000 and $54,000; and
\n\u2022 6.84 percent for an individual making more than $27,000 or a married couple making more than $54,000.<\/p>\n
Saying some senators were still concerned about the cost of providing broad tax cuts, Cornett introduced an amendment to the committee amendment that further adjusted the rates to result in a smaller tax cut than that proposed for 2015. The changes would reduce the three-year fiscal impact to $97.2 million and would focus on cuts for low- and middle-income taxpayers, while providing no reductions for the top tax rate. The amendment was adopted 40-3.<\/p>\n
\u201cThis represents a down payment on the tax relief we promised in January,\u201d Cornett said. \u201cThis represents a compromise in light of the concerns over the uncertainty of the next biennium.\u201d<\/p>\n
Lincoln Sen. Danielle Conrad opposed the bill, saying the state cannot afford to cut taxes in the current budget climate. She said the state\u2019s priority should be restoring cuts made to Medicaid last session.<\/p>\n
\u201cBefore we even start thinking about offering a tax cut, we need to ask ourselves if we\u2019re taking care of our state obligations,\u201d Conrad said. \u201cWe\u2019re restoring just half the cuts we made last year and now we\u2019re patting ourselves on the back and talking about tax cuts?\u201d<\/p>\n
Columbus Sen. Paul Schumacher also spoke in opposition to the bill. He said that future budget decisions cannot be made using pre-recession ideology.<\/p>\n
\u201cWe need to conserve our resources, build public assets, meet social responsibilities and realize that the rules we were used to are no more,\u201d Schumacher said.<\/p>\n
Supporters of the bill said taxpayers deserve a break after years of having to tighten household budgets while costs increased. Fremont Sen. Charlie Janssen said the proposed tax cuts have broad support among his constituents.<\/p>\n
\u201cMost taxpayers would be very supportive, even given the amount we\u2019re proposing,\u201d Janssen said. \u201cIt may be a small tax cut, but it\u2019s not an inconsequential one.\u201d<\/p>\n
Omaha Sen. Heath Mello said the compromise represented by the Cornett amendment would provide direct tax relief to low- and middle-income taxpayers.<\/p>\n
\u201cThis will have an impact on the people who live paycheck to paycheck,\u201d he said. \u201cProviding direct income tax relief ultimately gets recycled back into the economy.\u201d<\/p>\n
Cortland Sen. Norm Wallman introduced an amendment, defeated 5-23, that would have delayed implementation of the tax cut until 2014.<\/p>\n
Senators advanced the bill to select file on a 36-6 vote.<\/p>\n","protected":false},"excerpt":{"rendered":"
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