Nebraska senators advance income tax cut
LINCOLN, Neb. (KLKN) — State senators voted 41-0 on Thursday to advance an income tax cut that some say could put Nebraska among the lowest 15 states in terms of taxation.
If approved, it would gradually lower the top income tax rate for individuals and corporations to 3.99%.
Supporters of the bill said the new rate would help Nebraska attract new businesses and residents and keep current ones at home.
“Small business owners have been through quite a bit with the pandemic and inflation,” said Bob Hallstrom with the Nebraska chapter of the National Federation of Independent Business. “I think getting money back into the hands of small business owners would benefit them and their ability to grow their business.”
But those opposing the bill said it would mostly benefit out-of-state corporations because of how taxes in Nebraska work.
Rebecca Firestone, executive director of OpenSky Policy Institute, estimated that over 80% of the corporate tax cut would go to corporations based outside of Nebraska “who happen to have a lot of sales inside the state.”
Gov. Jim Pillen is backing the measure. The hope is that, together with other proposals, it would provide $3 billion in combined tax cuts over six years.
“All Nebraskans, whether located in Omaha or Scottsbluff, Nebraska, consider taxes when electing where to call home,” said Sen. Lou Ann Linehan, who introduced the bill.
OpenSky Policy Institute said this package of bills would most benefit the wealthiest.
“Our modeling suggests that the top 1% of Nebraskans – those are Nebraskans who are making more than $600,000 a year – on average would get a tax cut of about $25,000 a year,” Firestone said.
The lowest-earning 20% of Nebraskans, meanwhile, would save an average of $20, according to OpenSky’s estimates.
Some senators expressed concerns that the tax cuts could leave the state short of money in an economic downturn.
They said that in the long term, it could affect funding for education, health care, unemployment and more.
The bill now awaits a second round of debate in the Legislature.
