The Legislature concluded the 2013 legislative session on June 5th. Some good things were accomplished, some actions could have been improved upon, and important work remains in the interim months ahead.
I pleased to report that we were able to reduce the tax burden for some middle-income families in Nebraska.
Our state tax code previously included a state Alternative Minimum Tax (AMT) along the lines of the federal AMT. This tax policy was enacted in the 1960s as a parallel tax system with the purported purpose of catching higher-income tax filers who claimed certain income tax deductions on their tax returns. The AMT was supposed to ensure that these taxpayers paid a certain level of taxes. The tax was not indexed for inflation. Over the years has ensnared a growing number of middle-income families, making the tax code even more complicated and frustrating.
Economists almost universally have pointed out the flaws in this iteration of the AMT and tax policy experts have called for its repeal. The Legislature, through passage of LB 308, has finally removed our state AMT from the statutes. This will have a noticeable impact on our state’s tax rankings and I am pleased that the 2013 Legislature was finally able to get this done.
We also changed our tax code to assist new entrepreneurs and start-up companies. Also through provisions of LB 308, we were able to change our business tax code to permit new companies to “carry forward” losses that they may incur during their formative years. Previously, a new business was only able to “carry forward” losses for five years. LB 308 extended the time period if the start-up and its employees would benefit. This tax feature reflects the current federal tax code as well as nearly every other state tax code in the nation. This tax policy change will also improve our state’s rankings and assist new companies who expand and grow their businesses.
Another economic development bill we were able to pass made improvements to our state’s internship program. LB 476 expands the InternNE partnership with companies that participate in the program. Businesses can receive certain matching funds if they create significant and meaningful internship opportunities for post-secondary students in Nebraska. The previous version of InternNE had certain restrictions that have now been changed to enhance and expand the program. All post-secondary students will now be able to participate; previously only juniors and seniors could do so. Low-income students will also now be a delineated priority for grant funding. Better promotional efforts were also spelled out in LB 476. I am excited for the opportunities InternNE provides for the next generation of Nebraska’s workforce.
I was hopeful that we could better hold the line on spending in the crafting of the new biennial budget. While we were able to reduce the growth of government spending in certain areas of the budget, there were several parts that received increases that were above and beyond what I was comfortable with. I voted “No” on the mainline budget bill because I thought we could better prioritize state government spending. We will have the opportunity to adjust the budget next session, and I will continue to urge my colleagues to fund necessary governmental functions while reducing the urge to fund pet projects and ancillary programs.
We did manage to pass a balanced budget with the tax relief changes previously explained above, but I pointed out to the other senators that we could have done better.
During the upcoming months, my colleagues and I will have the opportunity to press for future tax reductions through the activities of the Tax Modernization Committee. Throughout the summer and fall, we will be soliciting input statewide from citizens and tax experts on how to make changes to our state tax code to make Nebraska more competitive and to make our state tax code more fair. I look forward to this important mission and look forward to building a consensus on tax policy changes that reduce our state’s tax burden on Nebraska families and businesses.
Please share your ideas with me on tax policy improvements and other state issues of importance to you. I can be reached at 402.471.2625 and email@example.com.