County officials contend the elimination of the inheritance tax would be devastating to their budgets.
Counties have begun to mount a campaign at the state legislature against Gov. Dave Heineman’s proposal to eliminate the inheritance tax. The governor has proposed a three-fold tax cut package which includes cutting individual income taxes, corporate taxes and elimination of the inheritance tax. The package would total $326.6 million over three years.
Counties collect the inheritance tax in Nebraska and many testified during a hearing before the legislature’s Revenue Committee that its elimination would either trigger property tax increases or severe cuts in county services. It is estimated the tax generates between $40 and $48 million dollars a year.
Brent Smoyer, a Lancater County commissioner, told Kevin Thomas on Nebraska Radio Network affiliate KLIN’s Drive Time Lincoln that the county collected about $6.6 million from the tax last year and projects it to bring in $6.8 million this year.
Smoyer said that eliminating the tax would force counties to make unpopular decisions.
“It’s going to be either a massive cut, it’s going to be a massive property tax increase or a blend of both, which, let’s face it, none of those three options is going to make anybody happy, especially myself,” according to Smoyer.
Douglas County, according to Smoyer, receives between $9 and $10 million dollars from the tax annually. He said western Nebraska counties use the money to pay for emergencies, such as tackling severe winter storms, or to pay for capital improvements.
Heineman anticipated the criticism during his testimony before the committee. Heineman, who spoke first at the committee hearing, pressed his proposal with emerging county opposition as a backdrop.
“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.
Legislative Bill 970, sponsored by state Senator Abbie Cornett of Bellevue, would cut $273.7 million in individual income taxes over three years, plus $52.9 million in the taxes large businesses pay as well as eliminate the inheritance tax.
Kevin Thomas of KLIN contributed to this report.
AUDIO: Brent Martin reports [:40]
AUDIO: Lancaster County Commissioner Brent Smoyer discusses inheritance tax on KLIN’s Drive Time Lincoln. [9:00]