Gov. Dave Heineman said today that he will continue to push for the elimination of the inheritance tax.
“Talk to retirees. People are leaving our state, because of the inheritance tax. Five years ago now, I guess, we eliminated the state Estate Tax, just to use the county’s argument. It cost the state about $125 million. I didn’t go raise the income or sales taxes. We kept our spending under control,” Heineman told reporters during a news conference today in his office.
Heineman proposed the elimination of the inheritance tax in a $326 million tax cut package he presented to the legislature last session. Worries about how that deep a cut would affect the state budget led lawmakers to trim the total package to $97 million. Objections raised by county officials led lawmakers to back away from ending the inheritance tax, which is collected by the counties.
Heineman said the proposed funding plan for the $370 million Cancer Research Center at the University of Nebraska Medical Center in Omaha undercuts the argument made to the legislature by county officials.
“Douglas County last year said they couldn’t afford to lose the inheritance tax, because they use it for day-to-day essential operations and now they come up with $5 million for a capital construction project. They just proved the point,” according to Heineman. “And so, yes, I’ll be back with a proposal to eliminate the inheritance tax, because it’s good public policy.”
The university might use $5 million from Douglas County and $35 million from the city of Omaha to complete financing for the cancer center project.
Officials from rural counties, especially in western Nebraska, have said they used revenue from the inheritance tax to pay for capital improvements or to amass an emergency fund.
Heineman said he was sympathetic with the argument and said he is willing to work with county officials to phase out the tax to soften the blow to their budgets.
“But, it’s hurting Nebraska,” Heineman insisted. “At the most important level, it is a bad public policy to have that inheritance tax. We are not competitive with other states.”
Heineman said 42 other states do not have an inheritance tax.
AUDIO: Gov. Heineman discusses his plan to again propose the elimination of the inheritance tax. [2:35]