LINCOLN, Neb. (Nebraska Examiner) — State senators pushing for a grand bargain on tax relief appear to have found a path past threatened filibusters to craft a package that would cut Nebraska’s top income tax and corporate tax rates and offset property taxes paid to community colleges.
The Legislature’s Revenue Committee settled Tuesday on a plan to combine Omaha Sen. Lou Ann Linehan’s income and corporate tax cuts from Legislative Bill 939 with Albion Sen. Tom Briese’s property tax relief proposal, Legislative Bill 723.
Critics of earlier tax proposals, including Omaha Sen. John Cavanaugh, had said Tuesday they would filibuster LB 939, the proposal to cut income and corporate taxes, because it helped wealthy Nebraskans more than middle-class taxpayers.
Cavanaugh had pushed for $200 direct payments to taxpayers in his plan, which would have kept tax rates the same. He said his proposal would protect tax revenues better against possible recessions that could leave the state cutting services people rely upon.
“We know what our fiscal picture looks like this year,” he said. “Pushing out the implementation of a massive tax cut mostly for rich people and corporations … we don’t know what the fiscal picture is going to look like when that bill comes due.”
Linehan said Tuesday she believes the combined tax relief package, bound for Legislative Bill 919, has more than enough votes to break any filibuster. And she said she’s confident the group will stick together against efforts to derail them.
“We’ve got the votes,” Linehan said.
The biggest difference between LB 919, as amended, and the bills from Linehan and Briese appears to be when the cuts and offsets will be fully implemented. The original, separate proposals would have reached full implementation in three years.
LB 919 will take five years to get to the same place.
Nebraska’s top income tax rate would drop over five years from 6.84% to 5.84% by 2027. The corporate tax rate would drop from 7.5% to 5.84% over the same span.
Property taxpayers would get a refundable income tax credit based on money set aside each year to offset property taxes that fund community colleges. The amount would climb from $50 million in the first year to $195 million in 2026.
The property tax credit program would be able to grow up to 5% a year, based on property valuations.
Revenue estimates have pegged the annual cost of the income tax cuts in LB 939 at about $400 million once fully implemented.
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