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Tax Reform in 2017

By Governor Pete Ricketts

April 17, 2017

 

The Governor’s official photo is available here.

 

Tax reform is a key component to Grow Nebraska.  It allows working families to keep more of the money they earn.  When companies consider their options to expand, headquarter, or relocate, the tax climate is one of the first things they consider.  Additionally, it can help grow our largest industries like agriculture and manufacturing.

 

If we want to continue to grow, we must pursue new growth strategies like a better tax environment.  We know that more money in the pockets of working Nebraskans is better for families and our economy.  It’s also better for new investment that grows key parts of our economy, including agriculture, Main Street, and the Silicon Prairie.  We have to keep chipping away at our high tax policies: USA Today ranks us fifth highest in the nation for property taxes, and the Tax Foundation ranks Nebraska 14th highest in the nation for income tax collections per capita.

 

This year, I’m working with senators on a comprehensive tax package that will provide tax relief for all Nebraskans.  LB461, also known as the 2017 Nebraska Taxpayer Reform Act includes four key components:

  • Property tax relief for ag producers
  • Individual income tax relief for working families and small businesses
  • Corporate tax relief for job creators
  • Tax credits for low income families

The 2017 Nebraska Taxpayer Reform Act will provide responsible tax reform that protects key budget priorities and delivers relief over 10 years.

 

As I travel the state, tax relief is the number one issue Nebraskans want to see changed.  But in the capitol, there are many special interests at work to kill tax relief in favor of more government spending.  I’m working to get tax relief going this session because waiting isn’t an option if we want to grow Nebraska.  Every moment we stand still, we become less competitive.  Just last year, five states lowered their income tax rates.

 

Here’s a few reasons Nebraskans tell me why we need tax relief now:

 

  • Protect Agriculture: Nebraska’s ag economy is hurting right now because of low commodity prices and high property taxes.  Nebraska’s ag producers need tax relief now to keep our state’s number one industry growing.  The 2017 Nebraska Taxpayer Reform Act:
    • Would have reduced total ag land property valuations by 12 percent statewide if it had been in effect in 2017.
    • Would have resulted in $147 million of property tax relief for Nebraska farmers and ranchers if levies stayed the same in 2017.
    • Caps Nebraska aggregate ag land valuation growth at 3.5 percent annually.
    • Changes the ag property value assessment methodology from a market-based system to an income-potential assessment.
    • Protects K-12 education by investing about $30 million annually into the state aid formula and adding equalization aid to about 40 additional school districts.

 

  • Support Working Families: Ninety percent of individual income taxes paid in Nebraska are paid by Nebraskans who pay in the top individual income tax rate, which is assessed on individual filers with a taxable income of $29,831 or more.  This rate has not come down in twenty years.  My plan takes it down approximately one-tenth of a percent from 6.84 percent to under 6 percent in eight steps that trigger as long as revenue is expected to grow 3.5 percent or more.  The 2017 Nebraska Taxpayer Reform Act:
    • Reduces the top income-tax rate steadily over time for taxable incomes of $29,831 and above for single taxpayers.
    • Increases tax credits for low-income families by increasing the Earned Income Tax Credit by 20 percent.
    • Helps grow Main Street because 90 percent of Nebraska businesses pay individual income taxes, and reducing it will allow them to put more money in their businesses for job creation.

 

  • Attract Job Opportunities: The Tax Foundation ranks Nebraska’s corporate income tax rate as 22nd highest in the nation, making our state less competitive globally.  Site selectors use tax rates as a screen when considering locations for new projects.  Bringing down income tax rates makes Nebraska more attractive for job creators.

 

These are just a few of the reasons why we need to get tax relief done this year.  While we are two thirds of the way through the legislative session, tax reform and the budget are just getting to the floor of the Legislature for debate.  If you want to see tax reform, or have concerns about other issues, contact your senator.  You can find their information at www.NebraskaLegislature.gov.  As always, please contact my office if you have feedback by emailing pete.ricketts@nebraska.gov or by calling 402-471-2244.

 

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