Gov. Dave Heineman made his pitch for $326.6 million in tax cuts during testimony before the legislature’s Revenue Committee.
The governor has proposed a three-prong package (LB 970). The governor proposes expanding each of the four individual income tax brackets, plus lowering the rates of each bracket. The top corporate tax rate would drop to equal the top individual tax rate; decreasing from the current rate of 7.81% to 6.7%. The inheritance tax would be eliminated.
Heineman pressed his proposal to eliminate the inheritance tax, despite mounting opposition by county officials.
“Despite of all the noise on this issue, it is good tax policy to repeal the inheritance tax,” Heineman told the committee. “This repeal completes the elimination of the death tax.”
Four years ago, the state eliminated the estate tax. Heineman said the state has cut its budget to absorb the $115 million in lost revenue.
Elimination of the inheritance tax, though, is a different matter. Counties collect the inheritance tax. County officials say its elimination will devastate budgets already stretched thin from the economic downturn. Douglas County officials estimate its elimination would cost the county $9-to-10 million. Lancaster County officials projected revenue of $6.8 million from the inheritance tax this year. Some counties in western Nebraska use revenue from the inheritance tax for an emergency fund or to pay for capital improvements.
Some critics of the governor’s proposal have questioned whether the state can afford it, a contention the governor took on during his testimony.
“Some will argue the state can’t afford tax relief, but that’s simply not true,” Heineman stated.
Heineman contended the state needs to lower taxes to remain competitive economically. He said the cut in corporate taxes would spur job creation and that overall tax relief would make Nebraska more attractive for individuals and businesses.
Heineman told committee members the critics are obscuring the benefits of the package.
“The choice for us is clear: tax relief for hard-working, Middle Class Nebraskans or more spending for special interest groups.”
AUDIO: Brent Martin reports [:45]
AUDIO: Gov. Heineman testifies before the Revenue Committee [12:30]