Income tax

Proposed corporate and personal income tax cuts spark support and anger | Nebraska

Proposals to cut Nebraska’s top personal income tax rate and corporate income tax won broad support Thursday from business interests, as well as stiff opposition, saying the plans bill would disproportionately help the wealthy while cutting state government revenue.

Senator Lou Ann Linehan of Elkhorn, sponsor of the corporate tax cut plan contained in LB938, said the cuts would attract businesses and talent to Nebraska, helping meet the challenge posed by its current shortage. of labor and opening the door to growth in the state.

Linehan is chair of the legislature’s revenue committee, which held a public hearing on the bills.

Bryan Slone of Omaha, president of the Nebraska Chamber of Commerce and Industry, said the bills could be a “game changer” for the state, addressing the challenge of a “whole new economy with a structure different workforce” as the nation emerges. of the COVID-19 pandemic.

It will be “a new competitive environment,” he told the committee.

Currently, Slone said, there are about 80,000 open jobs in the state.

Craig Beck, senior financial analyst for the Open Sky Policy Institute, said the plan would “disproportionately benefit the highest-paid Nebraskans” by significantly reducing their taxes while cutting state revenue by $400 million per year. year to year and leaving state government programs “vulnerable to major budget cuts.”

The average tax cut for most Nebraskans under LB939 would be $62.75 a year, compared to more than $8,900 a year for the top 1%, he said.

About 84% of the personal income tax cuts would go to the top 20% of Nebraskanians, he said.

Linehan’s LB938 would follow an earlier legislator-approved corporate tax cut plan to reduce the rate from 7.81% to 7.25% in 2023 by adding additional new cuts that would bring it to 5, 84% in 2026.

Linehan said the reduced rate will “attract more business” while allowing taxpayers to “keep their own money.”

Representatives from the Nebraska Federation of Independent Business, Nebraska Bankers Association, Lincoln Independent Business Association and Americans for Prosperity supported the proposal.

The benefits of the corporate tax cut would primarily accrue to wealthy nonresidents, Beck said, resulting in “reduced revenue for services to Nebraskans.”

Only $9 million of the $53 million in corporate income tax cuts would remain in Nebraska when the bill is fully implemented, he said.