August 30, 2014

Two tax bills killed, a new proposal rises in their place (AUDIO)

Proposals to change Nebraska tax law have been killed for this session. The legislature moves forward with a new plan: a complete study of the state tax system.

Two bills, LB 405 and LB 406, which proposed swapping the state income tax in exchange for the elimination of certain sales tax exemptions, have been killed.

“And those bills exiting stage right to give way to a broader, comprehensive tax reform study,” Sen. Beau McCoy of Omaha tells Nebraska Radio Network.

McCoy has killed his own legislation in favor of a bill calling for a comprehensive study of the state tax system, a revamped LB 613. The new legislation could make it to the floor of debate very quickly.

McCoy envisions the study team to take a long, hard look at the state tax system. It will review past studies, including those conducted years ago which have been effective only at collecting dust on some shelf. A December 15th deadline has been imposed for conclusions to be forwarded to the legislature, in time for possible legislation for the 2014 session.

The tax bills that have now been scrapped attracted considerable interests, including hour upon hour of public testimony during hearings in front of the Revenue Committee at the state Capitol. The new approach calls for public input as well, a lot of it.

McCoy says at least five public hearings will be held throughout the state, three in the Third Congressional District. A Tax Summit will be held. McCoy suggests that it be held during the State Fair this summer in Grand Island.

The initial legislation, sparked by Gov. Dave Heineman, called for the elimination of the state income tax, both individual and corporate. It proposed exchanging the state income tax for the elimination of $2.4 billion in sales tax exemptions. Business and agricultural groups protested the potential loss of sales tax breaks on inputs. The governor called for the plan to be scrapped and a thorough study of the Nebraska tax system to be launched.

LB 613 carries an emergency clause, making it effective upon the signature of the governor. McCoy says that will allow the legislature to immediately get started on the review.

AUDIO: Brent Martin reports [:45]

AUDIO: Brent Martin talks with Sen. Beau McCoy of Omaha about new tax reform legislation. [7:30]