A legislative hearing has been held. The governor has made his pitch. Now, the sponsor must sell a tax cut proposal during a legislative session seeking to cut the state budget.
Gov. Pete Ricketts proposes cutting a percent from the top individual income tax rate, bringing it down from 6.84% to 5.99%.
Sen. Jim Smith of Papillion, chair of the Revenue Committee, carries LB 337 for the governor, acknowledging the biggest obstacle it faces is the current fiscal situation.
“The casual conversations I’ve had with my colleagues, I think they do appreciate the very thoughtful and incremental way that this bill is designed,” Smith tells reporters. “And I will tell you that there is very broad support for tax reform this year and this bill fits right in with that.”
To ease concerns about its impact on state revenue, the cut would be implemented a percent a year over approximately eight years and only in years when state revenue is projected to grow by at least three-and-a-half percent.
Ricketts has argued that the tax cut would make Nebraska more competitive with other states, especially with those which surround Nebraska. He points out neither Wyoming nor South Dakota have an income tax and that of the other neighboring states, only Iowa had a higher income tax rates.
The proposal comes as state lawmakers consider budget cuts both to the current fiscal year and for the upcoming two fiscal years; the biennium budget to be crafted this legislative session. The Nebraska Economic Forecasting Advisory Board projects a $900 million dollar revenue shortfall for the upcoming biennium.
AUDIO: Brent Martin reports [:50]