- Associated Press - Friday, April 21, 2017

LINCOLN, Neb. (AP) - Nebraska lawmakers kicked off a debate Friday on an income and property tax package backed by Gov. Pete Ricketts, but it wasn’t immediately clear whether the bill had enough support to pass.

Senators adjourned for the week without reaching a vote or satisfying opponents who argued the proposal favors the wealthy and doesn’t do enough for agricultural landowners, who want their property taxes lowered.

The measure’s lead sponsor, Sen. Jim Smith of Papillion, said he was confident but acknowledged that some of his colleagues were still on the fence.

“I believe I will have the votes when I’m ready for them,” he said.

Smith cast the bill as a way to end the state’s “status quo” tax climate and make Nebraska more competitive with neighboring states, most of which have lower top income tax rates. Ricketts has identified the package as one of his top priorities in this year’s session, and called on senators Thursday to stand against “big government spenders” who oppose it.

The bill would give a larger benefit to wealthy residents who pay a larger share of their income at the top tax rate. Smith said the income tax portion was largely aimed at small businesses that would promote job growth and diversify the economy.

Sen. Robert Clements, an actuary and banker from Elmwood, said he has had clients leave Nebraska because of the state’s tax climate.

Critics said the package doesn’t do nearly as much for middle- and low-income residents. An analysis by the liberal-leaning Institute on Taxation and Economic Policy found that residents making $43,000 to $67,000 a year would see $53 in tax savings, while those making $509,000 annually would save nearly $6,000.

“In relation to what’s being given to the wealthy, it’s a crumb,” said Sen. Patty Pansing Brooks of Lincoln.

Sen. Kate Bolz of Lincoln, who serves on the budget-writing Appropriations Committee, said the bill could deprive the state of future revenue needed for K-12 schools, higher education and health care.

The measure would incrementally lower the state’s top personal and corporate income tax rates to 5.99 percent in years when revenue grows faster than a predetermined amount. It also would expand the earned income tax credit for low-income residents, combine the two lowest individual income tax brackets and eliminate exemptions.

Leading farm groups say the bill doesn’t do enough to address property taxes. The measure would change how agricultural land is valued for tax purposes, requiring local governments to base a land parcel’s tax bill on how much income it could potentially generate.

Values are currently determined by looking at sales of comparable land, which caused property taxes to soar when the farm economy was booming. The tax bills haven’t yet fallen even though commodity prices have tumbled, putting farmers and ranchers under stress.

Additionally, the bill would prevent aggregate statewide land values from growing by more than 3.5 percent a year in an effort to keep property taxes from rising so quickly. Advocates for lowering property taxes said the measure wouldn’t make a substantial difference on their tax bills, and some questioned the focus on income taxes.

“Never in my eight years (in office) has anyone said I want my income tax lowered,” said Sen. Bob Krist of Omaha. “They always talk about the property tax.”


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