Nebraska unveils new property, income tax plan

Nebraska unveils new property income tax planLINCOLN, Neb.: Gov. Pete Ricketts has unveiled a new tax package that would boost credits for Nebraska residents who own homes and farmland, lower the state’s top income tax rates and expand job-training programs.
The Republican governor outlined a proposal in his State of the State address that would focus more property tax benefits on in-state residents by excluding out-of-state landowners who don’t file income tax returns but still receive property tax credits.
The new initiative follows complaints from farm and ranching groups that their property tax bills have soared.
“We must help our farmers and ranchers with crushing property tax bills,” Ricketts said in his annual address. “We must help all Nebraskans keep more of their hard-earned money and attract more people to come to our state.”

The plan presented to lawmakers, the Property Tax Cuts and Opportunity Act, would use money from the state’s current property tax credit program. The current credit is applied directly to property tax bills, resulting in millions of dollars in benefits each year to landowners who don’t live in the state.
Ricketts’ proposal would shift the money into a refundable income tax credit, ensuring that only property owners who file a Nebraska income tax return can qualify. The new credit would only apply to residents who own homes or agricultural land. Renters and commercial property owners would see no direct benefit from the credit.

The property tax plan would also cap residential tax credits at $230, regardless of a property’s value. The maximum would rise after years when revenue exceeds projections. Ricketts said the limit was designed to benefit “the average Nebraska homeowner,” rather than owners of more expensive houses. Agricultural landowners would see a roughly 14 percent boost in the tax credit they receive, while residential property owners would get a 6 percent increase.
The second piece of the plan would use existing tax credits to lower Nebraska’s top personal and corporate income tax rates to 6.69 percent by Jan. 1, 2020. The current top personal rate is 6.84 percent and the top corporate rate is 7.81 percent.
“Cutting and reforming taxes is key to growing Nebraska,” Ricketts said. “Over the years, together, we have done the hard work needed to hold the line on taxes, but Nebraskans need and expect more.”

Sen. Jim Smith of Papillion, who introduced the proposal on the governor’s behalf, said the plan is designed to make the state more attractive to businesses while also responding to farm and rancher concerns. Smith said the new bill seeks to address concerns from last year’s tax package, which stalled in part because farm groups argued that it didn’t do enough for them.
“It makes better use of the dollars that were allocated for the property tax credit relief fund, because it’ll go toward resident taxpayers,” Smith said. “It makes those dollars stretch farther.”
The third piece of the plan calls for an additional $10 million for job-training programs over two years. Ricketts said the funding was important to help the state economy.

The plan is likely to face resistance. Sen. Adam Morfeld of Lincoln disputed the governor’s argument that lower taxes would help attract more residents to the state.
“We need LGBT protections, lower tuition, higher paying jobs and forward thinking policies and investments,” said Morfeld, whose district includes a large number of University of Nebraska-Lincoln students. -AP

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