Bills to Increase Sales & Income Taxes Will Be Heard This Week

The Legislature's Revenue Committee is set to hold hearings on proposals to raise Nebraska's sales tax rate and increase the state income tax rates.

On Friday, February 20th, the committee received testimony on LB256, introduced by Hoskins Senator Dave Bloomfield.

Under LB256, the state sales tax rate would increase from its current level of 5.5% to 6%. The bill was introduced as an effort to fund local property tax relief. The senator told the news media earlier this year that the bill "is purely a tax shift to reduce the load on property taxes."

On Thursday, February 26, the committee will hear testimony on LB523, a bill by Cedar Rapids Senator Kate Sullivan, who chairs the Education Committee.

LB523 would raise Nebraska's income tax rates to facilitate more state aid for public education, in hopes of shifting some of the tax burden for education from property taxes to income taxes. Under the bill, each of Nebraska's four individual income tax brackets would see an increase to the following levels: 2.56%, 3.65%, 5.21% and 7.11%. That is compared to the current levels of 2.46%, 3.51%, 5.01% and 6.84%. The bill would also expand the state's corporate income tax rate to 5.80% on the first $100,000 of taxable income, and to 8.12 % on income over $100,000. That is compared to 5.58% and 7.84% under current law.

The Nebraska Chamber opposes both LB256 and LB523. The State Chamber has longstanding policy opposing all legislative initiatives that purport to deliver property tax relief by simply shifting the mix of tax collections from property to sales and income.

Among the states imposing an income tax, Nebraska's top personal income tax rate is currently 15th highest, while Nebraska's top corporate tax rate is 19th highest, according to the Tax Foundation. 

Noteworthy Economic Development Bills

The Nebraska Chamber is monitoring hundreds of bills introduced this year. Below are summaries of some of the more notable economic development proposals that the State Chamber is supporting or opposing in the 2015 legislative session.

LB156 - Angel Investment Credit Expansion: Would expand the amount of credits allowed under the Angel Investment Tax Credit Act from $3 million to $5 million. The State Chamber supports LB156. The bill was heard February 5 and is currently in the Revenue Committee.

LB226 - Crowdfunding Authorization: Would allow for the use of crowdfunding - the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. The State Chamber supports LB226. The bill was heard on February 2 and is currently in the Banking, Commerce and Insurance Committee.

LB329 - Agri-Tourism Promotion Act: Would adopt the Nebraska Agri-Tourism Promotion Act to encourage landowners to grant access to their farm or ranch for recreation and tourism activities by reducing the risk of legal liability. The State Chamber supports LB329. The bill will be heard March 5 by the Natural Resources Committee.

LB331 - Bioscience Impact Opportunity Act: Would encourage high-wage job opportunities in Nebraska's bioscience industry. Among other things, the bill would create tax incentives and grants in an effort to make the state a national leader in the bioscience field. The State Chamber supports LB331. The bill was heard February 11 and is currently in the Revenue Committee.

LB538 - Audits & Extension of Nebraska's Business Incentives: Would extend sunset dates of two tiers of Nebraska's business incentives, but would also require additional audits of the programs. The State Chamber supports the concept of this legislation to ensure the continued success of the state's pro-business incentives. The bill will be heard February 25 by the Revenue Committee.

LB569 - Business Technology Transfer Grants: Would enhance the state's Business Innovation Act by including a Small Business Technology Transfer Grant program, raising the current allocation for such activities from $1 million to $4 million. The State Chamber supports LB569. No hearing date has yet been scheduled for this bill, which is in the Appropriations Committee.

LB609 - Bridge Repair: Would to establish a process of prioritizing county bridge projects by creating the Nebraska Bridge Repair Commission. The State Chamber supports LB609. The bill will be heard March 9 by the Transportation and Telecommunications Committee.

LB238 - TIF Restrictions: Would impose severe limitations in the use of Tax Increment Financing (TIF), thereby weakening local economic development efforts by further restricting what types of properties could qualify for TIF, while also imposing state-level mandates. The State Chamber opposes LB238. The bill will be heard by the Urban Affairs Committee on February 24.

LB473 - Eminent Domain: Would eliminate the power of eminent domain for pipelines, thereby endangering future energy supplies and revenue opportunities for Nebraska communities. The State Chamber opposes LB473. The bill will be heard by the Judiciary Committee on March 11.