Corporate Tax

Social safety, proposals to chop corporate taxes scaled again

Nebraska lawmakers scaled back proposed social security and corporate tax cuts Tuesday as Senators worked to reconcile policy changes with expected revenue.

Currently, Nebraska will tax Social Security when an individual’s gross adjusted income is above $ 44,600 for a single person or $ 59,100 for a married couple from all sources. Senator Brett Lindstrom suggested that these taxes be phased out over a period of ten years. This idea cost the state an estimated $ 168 million a year in lost taxes when fully implemented.

On Tuesday, Senator John Stinner, chairman of the Budget Committee, proposed that this tax cut be scaled back. His proposal would cut the tax in half within five years, and lawmakers would consider continuing with the rest of the cut. This would bring the annual cost to the state down to about $ 74 million by year five. Senator Curt Friesen supported the reduction and said there was great uncertainty about future revenues.

“A lot of federal dollars flow into this state. And right now I don’t know that we actually know what our real economy is. I think we are based on the false reality that the federal government can continue to borrow money and pour it into the states to stimulate the economy, ”Friesen said.

Stinner’s amendment also states that lawmakers intend to implement the remainder of the tax cut in the next five years, but that is not binding. The Senators accepted the amendment 37-0 and approved the bill in the second round 44-0.

Then they turned to a proposal to cut corporate taxes. Currently, Nebraska taxes corporate income over $ 100,000 at 7.81 percent. Senator Lou Ann Linehan, chairman of the Revenue Committee, proposed lowering that maximum rate to 6.84 percent, the maximum individual income tax rate that also applies to suburban and limited liability companies. Linehan said it was a question of the fairness and competitiveness of the state’s corporate tax rate.

“We’re not in tune with all of the states around us: South Dakota, Wyoming, no income taxes. Kansas, 4 percent. Missouri 4 percent, Colorado 4.63 percent. North Dakota, highest rate 4.31 percent. Even after going through this … we will still do more work after this calculation, ”Linehan said.

Senator John Cavanaugh protested, pointing out the estimated cost to the state treasury.

“This tax cut will cost us $ 113 million over the next five years. And the question we all have to ask ourselves is whether this is the best bet of $ 113 million. Can we invest $ 113 million in something else in the state of Nebraska to actually get a better return – we’re talking about the business here – the ROI? “Asked Cavanaugh.

Cavanaugh suggested that it would be more productive to invest in things like improving roads and other infrastructure.

During the lunch break, he, Stinner and Linehan negotiated a compromise, among other things. Instead of dropping the rate to 6.84 percent in one year, it would drop it to 7.25 percent within two years and then lawmakers would evaluate what to do next. As with the social security cut, the legislation includes intent language stating that the rate should be cut to 6.81 percent in four years.

Senator Mike Flood read through the intent language and said it was “nice language,” but added, “It means nothing. It actually means less than the breath I just spent on it. “

The Senators voted 45-0 to accept the compromise amendment and approved the bill with one vote in the second round. The bill also includes a $ 2,000 family tax credit for children who are stillborn after 20 weeks of gestation.

Also on Tuesday, the Senators tabled a bill preventing people from suing companies for damages for exposing them to COVID-19 if those companies comply with federal health guidelines. Senator Matt Williams praised the measure.

“This is the right thing to do to help our businesses. It still doesn’t protect bad actors. You essentially have to adhere to targeted health measures to get this type of protection, ”Williams said.

Senator Matt Hansen said he had objections in principle.

“I think the state of Nebraska is making a serious misstep where our only targeted COVID response for a legislative priority will be corporate liability protection, not more directly to the people of Nebraska, many of whom will not Benefit in some way from that bill, ”said Hansen.

The bill also requires the state to keep a record of who should be cared for if a future disaster exceeds the health system’s capacity. Senator Steve Lathrop described what it said should and should not be considered. “Things like race, religion, national origin, speaking English, not speaking English are not taken into account. If you can imagine what makes one person different from the other, none of these things are taken into account. It will simply be based on the likelihood that they will benefit from care in the future, and it should be, ”Lathrop said.

The senators approved the bill in the first round with 39 votes to 3.

Related Articles