Plan for greater income, property, tax reduction of social security hits new roadblock in Nebraska Legislature | Government-and-politics
Plan for greater income, property, tax reduction of social security hits new roadblock in Nebraska Legislature |  Government-and-politics

Plan for greater income, property, tax reduction of social security hits new roadblock in Nebraska Legislature | Government-and-politics

A major package of income tax cuts and property tax cuts fell short in Nebraska’s Legislative Assembly on Friday.

But supporters promised to try again this session, how late. Lou Ann Linehan of Elkhorn, chairman of the Revenue Committee, called the failure of the tax measure “just a hiccup.”

Linehan said she was shocked that the filibuster termination of the cloture movement on the LB825 failed. The proposal received 32 votes, but required 33 to be successful. Thirteen senators abstained from voting and four were absent. Based on legislative practice, the bill will not return this year.

But Sen. Brett Lindstrom of Omaha, who introduced the LB825, said the fight for tax breaks is not over. He said he expects supporters will find another legislative remedy for the idea package.

LB825 would, as advanced to the second of three rounds of debate, have phased out income taxes on social security benefits in four steps.

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A surprising change offered Friday morning would have incorporated other tax bills into the bill. The change would have scaled down the state’s top corporate and individual income tax rates and extended income tax deductions offered to property taxpayers.

Lindstrom, a GOP candidate as governor, hailed the package as the “biggest thing” for years, saying Nebraska must make the proposed changes to compete with other states. But he said more work will be done on tax reform in the future.

Another supporter, Senator Tom Brandt of Plymouth, said fears of the tax measures that put Nebraska in an economic crisis along the way were exaggerated. In fiscal year 2024-25, the package is expected to reduce government revenue by $ 565 million.

“This is about ‘go big or go home,'” he said. “This helps all Nebraskans.”

But Sen. Tony Vargas of Omaha, a Democratic nominee for the Second District of Congress, questioned whether the state could afford all of the proposed tax changes. He also pointed out that a large population of Nebraskans would not see a tax cut from the proposal.

Those excluded from income tax relief include single branches earning less than $ 40,676 or married files earning less than $ 81,352 unless they receive social benefits. The property tax deductions would not go to anyone who does not own property.

Several opponents objected to packing all the tax measures together. The proposal for social security enjoyed broad support during the first round, but the income tax cuts have had a tougher path. Opponents blocked a separate income tax bill earlier this week.

Linehan said she is not yet sure which way supporters will use to get the tax package passed. But she warned that the state budget could be in jeopardy if lawmakers continue to stand in the way of tax cuts. Legislators are due to vote on the adoption of the budget bill on Tuesday.

“If they want a budget, we need tax breaks,” she said.

The change proposed on LB825 will lower the top corporate and individual income tax rates to 5.84% over five years. Under current law, the highest corporate interest rate is 7.5% this year and is expected to fall to 7% next year. The highest individual rate is now 6.84%.

The change will help property owners by creating a new refundable income tax deduction equal to a portion of what they pay in community college property taxes.

The new credit program would be similar to the LB1107 program, which was created two years ago and which offsets part of what property owners pay in property taxes to K-12 schools. The LB1107 program will provide up to $ 548 million in credits this year, equivalent to about a quarter of the school’s property taxes.

The proposed community college credit program would start at $ 50 million this year and increase to $ 195 million by 2026. Upon full implementation, the program could offset about three-quarters of community college property taxes.

The change would set the size of the LB1107 credit program at $ 560.7 million for 2023. Once the maximum value set by the change is reached, school and community college credit programs will be allowed to grow immediately. percentage as property valuations in the state grow, up to a maximum of 5%.

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