- Associated Press - Monday, January 30, 2017

LINCOLN, Neb. (AP) - In a story Jan. 30 about Nebraska Gov. Pete Ricketts’ tax plan, The Associated Press erroneously omitted the word “struggling” from a statement by the OpenSky Policy Institute’s executive director. The statement by Renee Fry should have said that the bill is “unlikely to help struggling small businesses as many are unlikely to have enough income to receive any tax cut under the measure.”

A corrected version of the story is below:

Ricketts rallies Nebraska business owners behind tax plan

Gov. Pete Ricketts is rallying Nebraska’s business community behind his plan to cut the state’s top income tax rate

By GRANT SCHULTE

Associated Press

LINCOLN, Neb. (AP) - Nebraska business leaders rallied Monday behind Gov. Pete Ricketts’ plan to cut the state’s top individual income tax rate, casting it as a way to lessen some of their expenses.

Small business owners from around the state gathered with Ricketts at the Capitol to tout the measure, which would lower the top rate from 6.84 percent to 5.99 percent over eight years.

Ricketts argues that lowering the top tax rate would stimulate the economy by encouraging businesses to hire more people and invest more in their operations.

“If we want families to move here, if we want companies to expand here, if we want small businesses to grow, we have to be more competitive when it comes to taxes,” Ricketts said at a news conference.

Critics of the plan point to tax cuts in Kansas, which failed to create any major economic growth and triggered a state budget crisis. Lowering the top rate would provide a much larger tax savings for the wealthy than the middle class because more of the wealthy’s income is taxed at the top rate.

Nebraska’s top bracket kicks in at $29,831 for single taxpayers and $59,661 for married couples. People whose taxable income is less after claiming deductions would see no savings.

The Legislature’s Fiscal Office has not yet estimated how much the bill would cost the state in lost revenue. The Department of Revenue has said in the past that a large number of Nebraska business owners file their taxes not as corporations but individuals.

Ricketts said his plan is different because it’s incremental, only kicks in when revenue grows by more than 3.5 percent and relies on cutting expenses first.

“We’re at a decisive juncture today in our state, where business and job growth is critical,” said Sen. Jim Smith of Papillion, a business owner who introduced the bill on the governor’s behalf. The bill “is essential to moving us in the right direction and to provide tax relief to small businesses in our state.”

Jack Schreiner, the owner of Bruckman Rubber in Hastings, said the bill would ease some of the taxes and regulations he sees “piled up” on business owners. Schreiner said reducing the top rate will leave him with more money to reinvest in his company.

“The only way we get money is to work our butts off … and then we step back and watch whatever the government takes out of it,” he said. “That’s what we’ve got left to feed our families and grow our businesses.”

Adrian Suarez, who owns Subway restaurants in Omaha and Lincoln, said the tax cut represents “an investment in the future” of his company that would add up over the years.

Roxie Kracl, a restaurant owner and farm owner from Fremont, said the state’s taxes have been “crushing” her businesses and limiting the amount they can reinvest. Last year, she said she had to take out a second mortgage to pay her income taxes.

“If the state is going to make a difference, we need support and backing” of the bill, Kracl said.

The state’s largest business groups have endorsed the governor’s proposal, but some lawmakers and lobbying groups have said they doubted whether it would actually help the economy.

The bill is “unlikely to help struggling small businesses as many are unlikely to have enough income to receive any tax cut at all under the measure,” said Renee Fry, executive director of the OpenSky Policy Institute, a think tank that has been critical of other income tax proposals.

Fry noted that the bill would also reduce available revenue for future spending priorities, such as public safety and economic development programs. The revenue the state collects could be used to reduce reliance on local property taxes, she said.

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Follow Grant Schulte on Twitter at https://twitter.com/GrantSchulte

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