Greetings from the Nebraska State Capitol. We have concluded the fourth week of the 102nd Legislature, Second Session. We continue with the same schedule of early morning debate with committee hearings in the afternoon.
Legislative bill 970 has received a significant amount of attention since the Legislature convened, in particular the elimination of that tax. In a previous column, I articulated my thoughts on the elimination of the inheritance tax. However, the bill also contains another crucial element, $327 million in tax relief for Nebraskans.
LB 970, introduced by Senator Abbie Cornett on behalf of the Governor, would reduce individual and corporate income taxes. Under LB 970, each individual tax bracket would have a lower rate, the range of income would also be spread out more evenly. To put this into perspective, the Governor cited some examples that I would like to share with you. If you are a family of four with an adjusted gross income of $30,000, under LB 970, you would receive a 29.5% tax cut. If you are a single mom with two children and an adjusted gross income of $40,000, you will receive a 10.5% tax cut. If you are a family of four with an adjusted gross income of $75,000, you will get a 10.9% tax cut. If your adjusted gross income is $100,000, your tax cut will be 7.2%. However, if your adjusted gross income is $1,000,000, you will only receive a 2% tax cut. Cutting the individual income tax is beneficial to both Nebraskans and the State. Allowing the people of Nebraska to keep more of their hard earned money, will help grow the economy. If LB 970 passes, Nebraskans will have the ability to save more money for the future, to invest or spend it.
The corporate tax rate would be reduced to 6.7 percent. Currently, Nebraska has the highest corporate tax rate compared to all the states that border us, excluding Iowa. Both South Dakota and Wyoming do not even have a corporate income tax. I believe this places Nebraska at a disadvantage. A lower corporate tax rate would attract more businesses to the state, resulting in more jobs for Nebraskans and drawing in more employees to Nebraska. I believe this would also help current corporations and their employees. In most cases, costs associated with the corporate tax are passed on to workers through lower wages. It also affects the consumers who are buying the product, often times this tax is reflected in higher prices for those products. If a business is able to retain more money they are more likely to invest in their company and expand and hire new employees.
Lowering taxes will ultimately help Nebraska’s economy grow. It will attract new people to the state along with new businesses. It will allow for the expansion of current businesses and give people the ability to spend their money more freely. Nebraska is a great place to live. Ultimately, more people living in the state and paying taxes will generate more revenue for the state and local budgets.
If passed LB 970 would go into effect next year. Over the next 3 years, this would result in a $327 million tax relief for the citizens of Nebraska. I believe now is the time to implement tax relief for the hardworking people of this State. I commend the Governor and Senator Cornett for their diligence on this important issue.
As always if I can be of any assistance to you please do not hesitate to contact my office. My office phone number is (402) 471-2712 and my email address is firstname.lastname@example.org.