Lawmakers Pitch Nebraska Tax Relief Proposals

Lawmakers Pitch Nebraska Tax Relief Proposals

By Grant Schulte, Associated Press. CREATED Feb 8, 2012

Lincoln, NE (AP) - Nebraska lawmakers pitched a series of tax relief proposals Wednesday, including three designed to rival Gov. Dave Heineman's plan to lower income tax rates and repeal a county inheritance tax.

Each bill sponsor argued that his proposal should top the Legislature's list this year as lawmakers decide what, if any, relief to grant.

Heineman has proposed a $327 million tax-cut plan that includes the elimination of the inheritance tax and cuts to corporate and individual income taxes.

The Republican governor has said his proposal - which provides $274 million in relief for individuals and $53 million for businesses - will help ease the financial burden on middle-class families and encourage newcomers to settle in Nebraska. But the bill package faces strong resistance from counties who say it will force them to raise property taxes and from some lawmakers who say the plan requires cuts in state education aid.

One measure by Omaha Sen. Jeremy Nordquist would exempt Social Security benefits from being taxed, an idea supported by retiree groups, the liberal activist group Bold Nebraska and the conservative Platte Institute, a Nebraska think-tank.

Nordquist, a Democrat in the officially nonpartisan Legislature, said the governor's plan would result in the "flat-lining" of state aid for K-12 education, child welfare reforms and services for those with developmental disabilities.

Nebraska is one of only five states that tax Social Security benefits, and the other four exclude the portion that is paid to the federal government, said John McCollister, executive director of the Platte Institute. He said the state tax on Social Security benefits is at least a double tax on seniors who paid into the system while they worked, only to see the income hit again in retirement.

Mark Intermill, a lobbyist for AARP Nebraska, said his group supported the bill but acknowledged that the state probably can't afford it. Intermill urged the Legislature's Revenue Committee to cap the amount of exempted Social Security income at $4,000 per person.

Another proposal came from Omaha Sen. Heath Mello, and would give homeowners approximately $76 million in property tax relief through an exemption on the first $8,000 of their home's value.

Mello said his bill, introduced in response to Heineman's proposed tax cuts, would deliver between $150 and $160 in property tax relief to the average Nebraska homeowner.

Bellevue Sen. Abbie Cornett, chairwoman of the Revenue Committee, suggested in the hearing that Mello's proposal favored homeowners, while the governor's proposal - which she is sponsoring - would help a greater number of Nebraskans.

Heineman has said his plan should be the Legislature's top priority this session, and presented his case to Nebraskans in a series of speeches after his State of the State remarks last month.

He has said that the counties complaining about lost tax dollars should cut spending, as the state did when it lost revenue in the wake of repealing the Nebraska estate tax.

Heineman signed a similar tax relief bill in 2007 that provided $425 million in income, sales and property tax cuts over two years.

A third bill by Lexington Sen. John Wightman would increase exemptions for the state's inheritance tax and lower the rates over time. Wightman said his measure would give counties time to adjust their budgets gradually, following cuts in state aid last year. He said he was "very concerned" that the sudden loss of inheritance revenue proposed under Heineman's plan would lead to increases in property taxes.


(Copyright 2012 by The Associated Press. All Rights Reserved.)