Nebraska tax cut proposals get mixed reception in committee

0

LINCOLN, Neb. (AP) — Proposals to cut Nebraska’s top personal and corporate tax rates received strong support Thursday from the business community, but were rejected by a tax policy think tank who questioned the benefits to the economy.

Business groups have argued that the tax cuts would make Nebraska more attractive to businesses, especially compared to neighboring states that are all lower except for Iowa.

“Our highest tax rates are the gateway for companies looking to invest in Nebraska,” said Bryan Slone, president of the Nebraska Chamber of Commerce and Industry, in testimony before Legislative Assembly Revenue Committee.

Bud Synhorst, president of the Lincoln Independent Business Association, said the bill would allow companies to keep more money which they could then reinvest to expand their businesses and pay workers.

“By being tax competitive, we send the message that we are open for business,” Synhorst said.

But the bill has been criticized by the OpenSky Policy Institute, a tax policy think tank that often criticizes measures that reduce the income state.

Craig Beck, the group’s senior tax analyst, questioned whether lowering corporate taxes would help the state’s economy and noted that the state already spends millions each year on tax incentives. Beck said reduced state revenue would “hinder Nebraska’s ability to invest in schools, public safety and infrastructure.”

The bills are a top priority for Republican Gov. Pete Ricketts, who has pledged to cut taxes with part of the $412 million in excess tax revenue the state collected last year. They would lower Nebraska’s top rates to 5.84%, from the current 6.84% for individuals and a 7.25% rate for corporations that is expected to take effect next year.

State officials said nearly 419,000 Nebraska taxpayers have incomes that reach the top of the state. However, reducing the top rate would provide a much greater benefit to those with higher incomes, who pay more taxes.

The plan would reduce state tax collections by $178.8 million by fiscal year 2025. Like many other states, Nebraska is loaded with cash from a better-than-expected pandemic economy and billions in dollars in federal stimulus payments that went to most Nebraska taxpayers.

Lawmakers also considered a measure that would keep the top personal income tax bracket at 6.84%, but add two higher rates for the wealthiest taxpayers.

Senator Machaela Cavanaugh of Omaha’s bill would eliminate the lowest tax bracket and merge the next two brackets. A new bracket of 7.75% would come into effect for individuals earning at least $100,000, and the next bracket would impose an 8.25% tax on one-time taxable income over $1 million.

Cavanaugh said the bill was intended to protect low- and middle-income earners while raising taxes on the state’s wealthiest residents, but called the proposal a “starting point” subject to change. The bill has been opposed by business groups and would cost the state about $348 million in lost revenue in fiscal year 2024.

___

Follow Grant Schulte on Twitter: https://twitter.com/GrantSchulte

Share.

About Author

Comments are closed.