Tax Relief: Giving Back the People’s Money
By Governor Pete Ricketts
February 15, 2022
Governor’s official photo here.
What should happen with extra tax revenues? That’s the main question being debated this session by state senators. For me, the answer is obvious. The money should be given back to the hardworking Nebraskans who paid those taxes in the first place.
When the state government takes in more taxes than it needs, the elected representatives of the people have a responsibility to make sure the money goes back to the people. After all, this is the people’s money.
There are three broad tax proposals I’ve recommended to the Legislature this year. The first is to protect property tax relief delivered through the Refundable Income Tax Credit created in 2020. This offered an offset of 6% of local school property taxes last year. This year, taxpayers can claim a 25.3% credit when they file state income taxes.
Currently, this property tax relief is not permanent. Without action from the Legislature, Nebraskans will lose nearly $200 million of tax relief through the Refundable Income Tax Credit in 2024. Legislative Bill (LB) 723 makes sure this property tax relief doesn’t get taken away from the people of Nebraska.
My second proposal is to speed up tax relief on Social Security income. Last year, we passed a bill to exempt Social Security income from taxes. The exemption is currently scheduled to phase in over the next decade. Nebraska is one of only a handful of states that still taxes Social Security benefits. We don’t want seniors leaving our State because we’re taxing them in ways other states are not. I’m proposing to accelerate the phase-in period from ten years to five years to deliver that tax relief faster. Senators advanced LB 825, the bill to provide this relief, by an initial vote of 42-0. That’s an encouraging sign, and we need to make sure it gets to the finish line.
My third proposal is to gradually lower our top income tax rate from 6.84% to 5.84%. Some have tried to brand this as a tax cut for the wealthy. The truth is that this relief would be available to all Nebraskans with a taxable income of $32,210 a year, or families with a taxable income of $64,430 a year.
Six out of ten Nebraska families who filed a joint tax return would benefit from this change. This includes the Kavan family in Lincoln. Adam runs a small custom construction business, while Sam is an event space coordinator. It includes Deb Schilz, an agency manager for an insurance firm in Ogallala, and her family. And it includes our first responders, like Guy Pinkman and Jacob Bettin. Guy spent more than 30 years serving the Lincoln community as a firefighter before retiring last month, while Jake serves as a police officer with the Omaha Police Department.
We must also recognize that our income tax rates are not competitive within the region. The only state around us with a higher income tax rate is Iowa, and they’re considering major income tax cuts this year that will usher in rates well below Nebraska’s. To grow Nebraska, we must follow the trend of lowering income tax rates. We want our kids and grandkids to stay here in the Good Life. A competitive tax climate will help us keep our children and families in Nebraska. Without action, we risk being an outlier in the region for our high tax rates.
I’ve asked senators to extend this relief to job creators as well. There’s an urgent need to reduce tax rates to attract more jobs here to Nebraska. LB 939 is the tax bill being debated to deliver this important relief to our families and small businesses.
Our success in controlling spending and growing Nebraska has put the Legislature in prime position to deliver on all three of these tax priorities. The budgets I’ve passed as Governor have all controlled spending to an annual average growth rate of 2.5%. At the same time, Politico ranks Nebraska’s economy as having the best pandemic recovery in the nation. Our State’s strong revenues reflect the growth we’ve seen.
Nebraska’s revenue has been well above forecasted predictions. Last October, the Nebraska Economic Forecasting Advisory Board raised its initial forecast of State revenues by a combined $903 million for Fiscal Years 2021-2022 and 2022-2023. Even after this massive adjustment, State revenues continue to outpace projections. To date, General Fund tax receipts have surpassed October’s revised forecast by a combined $119 million. That’s over $1 billion in excess revenue.
This excess revenue belongs to the people of Nebraska. It’s not my money as Governor. And it’s not the Legislature’s money to spend. It’s the people’s money. I am asking senators to return it to Nebraskans by providing tax relief. And we can deliver this relief while continuing to provide top-notch government services throughout the State.
In the coming weeks, the Legislature will take key votes on tax bills, including LB 723, LB 825, and LB 939. I encourage you to reach out to your state senator and share your thoughts on tax relief. Hearing directly from the men and women they represent can make all the difference in how senators decide to vote. You can find their contact information at nebraskalegislature.gov.
If you’d like to learn more about my strong support for tax relief, email me at email@example.com or call 402-471-2244. Together, let’s make sure the Unicameral delivers the tax relief the people of Nebraska deserve.