Tax Reform/Relief Bills Advance

State budget bills expected to be given final approval by April 16.

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative and political week ending April 2

Lawmakers adjourned for the long, four-day Easter holiday weekend on Thursday, having processed a good number of priority bills over the course of the week. When the Legislature reconvenes next Tuesday, the agenda will include a small number of “consent calendar” bills and bills designated as Speaker priorities.

Tax Relief/Reform Bills Advance

The Revenue Committee advanced the following bills to General File during the past week that provide some measure of tax relief or tax reform:

Legislative Bill 432 – Income Tax – “Shell Bill”: As introduced by the Revenue Committee, LB 432 would sunset the current individual and corporate income tax rates for years beginning on or deemed to begin on or after January 1, 2022. Designed to serve as a “placeholder” bill by the Revenue Committee, the bill was amended prior to being advanced, with the provisions of LB 680. The amendment would create parity between the highest marginal individual income tax rate of 6.84% and the top marginal corporate income tax rate of 7.81% by reducing the tax rate on corporate income in excess of $100,000 from 7.81 percent to 6.84 percent beginning January 1, 2022.

Nebraska’s corporate income tax currently has two brackets. The first $100,000 of taxable income is taxed at 5.58%, with all taxable income in excess of $100,000 taxed at a marginal rate of 7.81%. (NFIB Position – Support) (Revenue Committee Priority)

Legislative Resolution 11 Constitutional Amendment – Consumption Tax: Introduced and designated as a priority bill by Sen. Steve Erdman (Bayard), LR 11CA is a proposed Constitutional Amendment that would overhaul the state system of taxation by repealing the state’s corporate, income and property taxes, and replacing them with a new consumption tax levied on the purchase of services and new goods. (NFIB Position – Oppose)

Priority Bills of Interest

Legislative Bill 644 – Property Tax Request Act: Debate on LB 644 is anticipated sometime next week, as the bill has surfaced on the agenda of priority bills to be considered. Under LB 644, introduced by Sen. Ben Hansen (Blair), designated political subdivisions would be required to explain how much a property taxpayer’s bill would increase if the proposed tax increase were approved and hold a hearing on these tax increases after 6 p.m. to allow citizens to better participate in the process. As amended by the Revenue Committee, the measure would require counties, cities, school districts, and community colleges to comply with certain notice and hearing requirements prior to setting the property tax request in an amount that exceeds the property tax request for the prior year, accounting for allowable growth (growth and assessed value of property from the prior assessment year to the current assessment year) resulting from (1) annexation of property; or (2) development of property. (NFIB Position – Support)

Speaker Charts Short-Term Agenda

Speaker Mike Hilgers (Lincoln) closed the week by announcing the “big picture” schedule for the legislative agenda over the next few weeks. Debate on the package of budget bills advanced to the floor of the Legislature by the Appropriations Committee will commence next Thursday. It is anticipated that the budget bills will be given final approval by April 16. Upon adoption of the budget, taxation and spending bills will be scheduled for debate the following two weeks.

Tax Reform-The Road Ahead

Seven members of the Revenue Committee held a news conference on Thursday to announce that the advancement of a series of bills proposing broad reduction of taxes have “set us up for real tax reform” next year. The Revenue Committee is expected to craft a comprehensive tax reform plan and conduct a statewide tour to obtain citizen input prior to the start of the 2022 legislative session.