Competing for Growth

March 22, 2017 Leave a comment


By Governor Pete Ricketts

Over the last two years, Nebraska has hit some key growth benchmarks.  In 2015, for the first time, Nebraska had over one million non-farm jobs.  Our population hit an all-time high of 1.9 million people last year.  And just a few weeks ago, Nebraska won the Governor’s Cup for the most capital investment projects per capita in the nation.  Over 100 new investments helped Nebraska garner this coveted award.

 

Even with all these successes, Nebraska should not rest.  We must continue to look for ways to become more competitive nationally.  Other states are constantly working to develop new competitive edges to attract more people, jobs, and investment.  

 

One significant area that Nebraska is not competitive in is taxes.  We are a high tax state.  Bloomberg ranks Nebraska 16th highest for income taxes and USA Today rates us 5th highest for property taxes.  Recently, the Tax Foundation released a new study showing Nebraska ranks 14th highest nationally for income tax collections per capita.  High taxes stifle growth, hinder job creation, and burden family budgets.  Our tax rates also matter because site selectors in charge of picking venues for new investments screen out high tax states for new projects, meaning Nebraska can miss out on even being considered for some investments.

 

If we are going to stay competitive, we must make progress in bringing our tax rates down.  Over the past two years, we successfully delivered over $400 million in direct property tax relief for all property owners across the state, and an additional $40 million in property tax relief targeted at ag land taxpayers.  Additionally, we worked with the Legislature last year to put more resources towards state aid to K-12 schools along with new spending controls on school spending.  

 

This year, we are working with the Legislature on new reforms to income and property taxes to make our state more tax competitive. 

 

In the area of income tax, I am working with Revenue Committee Chairman Jim Smith to bring down our top tax rate from 6.84 percent to under six percent.  Bringing down the top tax rate is critical because 90 percent of income taxes are paid by Nebraskans who pay in the top tax bracket.  This includes solidly middle class families making more than $29,831 of taxable income.  Additionally, 90 percent of Nebraska businesses pay individual income taxes, according to the Nebraska State Chamber of Commerce.  Cutting income taxes will give more money back to family budgets, help Main Street grow job opportunities, and make our state more attractive to job creators.

 

On property taxes, I am working with Ag Committee Chairwoman Lydia Brasch to change the way ag land is valued for taxation purposes.  With the Agricultural Valuation Fairness Act, we are proposing to move assessments for ag land from a market-based system to an income-potential approach.  This will help valuations to better reflect the income of Nebraska’s ag producers.  This is long-term, structural reform that will help ensure our state’s number one industry remains strong.  This system has been suggested to me by ag producers across the state, because of the success other ag states have experienced.  If the Agricultural Valuation Fairness Act were in place for 2017, it would have reduced ag land valuations by about $2.2 billion.

 

Getting both income and property tax reform done this year is critical for growing both Main Street and agriculture, and key to bringing together both urban and rural senators in the Unicameral. 

 

While many senators are focused on getting tax reform done this year, a small minority have suggested no tax relief is needed.  Last week, one senator even suggested that the Legislature should consider raising taxes instead of providing tax relief.  Our income tax rates are already uncompetitive.  Raising our income tax would put an additional burden on our middle class families and small businesses.  Right now, our sales tax is middle-of-the-pack.  Raising our sales tax even a penny would give Nebraska the 14th highest sales tax in the nation, according to the State Chamber.

 

As you can see, we need to focus on bringing tax rates down if we want to ease the burden on our families and grow Nebraska.  Raising taxes would make us less competitive and less attractive to job creators as well as to families looking to move here.  If you have feedback on what you would like to see the Legislature do on tax reform, I encourage you to contact your senator.  You can find all their information at www.NebraskaLegislature.gov.  If you have feedback for me, I hope you will contact my office by emailing pete.ricketts@nebraska.gov or by calling 402-471-2244.

Governor Pete Ricketts

 

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Center Urges Return to Balanced Taxes in Nebraska

February 20, 2015 Leave a comment


The Nebraska Legislature’s Revenue Committee is hearing public testimony on LB 280 and LB 357 – two legislative proposals to make major changes to Nebraska’s tax system.

 

For years, the Center for Rural Affairs has called for a balanced approach to funding schools and local governments. That’s why we support LB 280, because it is the only balanced tax plan before the Legislature.

Jon Bailey, Rural Policy Director

Center for Rural Affairs

 

LB 280 is a bill sponsored by Senator Al Davis, which proposes to reduce property taxes for school funding purposes only, expand resources for schools, reduce reliance on property taxes through a local income tax for schools, and increase state aid to schools through a method that balances the interests of all Nebraska schools.

 

“As Nebraskans have heard for decades, the real tax debate in this state should be how to provide meaningful and sustainable property tax reform in a state where local governmental entities are too reliant upon property taxes,” said Jon Bailey, Director of the Rural Public Policy Program at the Center for Rural Affairs. “There now seems to be a consensus among the citizens, the Legislature, and the new administration that the time has come to provide meaningful and sustainable property tax reform.”

 

We believe LB 280 provides the opportunity for meaningful and sustainable property reductions, particularly in rural areas, Bailey added. However, the real question, and a serious question the Revenue committee must begin to answer must be how can Nebraska enact meaningful property tax reform and also avoid harmful cuts to schools and other key services?

 

According to Bailey’s testimony, these questions are particularly crucial for rural Nebraska. The vast majority of our state is property rich, but people poor – an increasingly smaller number of rural residents are paying the freight for our schools and our local government. Data show that residents in areas with high amounts of agricultural land pay more in combined income and property taxes than residents of areas with the least amount of agricultural land, both on a per-capita basis and as a share of income.

 

“For years, the Center for Rural Affairs has called for a balanced approach to funding schools and local governments,” Bailey continued. “A third from income taxes, a third from property taxes and a third from sales taxes – the three legged stool. The current extreme reliance on property taxes for schools and local governments shows how far that three legged stool is out of balance.”

 

That’s why the Center supports LB 280, because it is the only balanced tax plan before the Legislature, concluded Bailey. It is the only comprehensive tax plan that recognizes that property taxes and school funding drive each other, and the only comprehensive tax plan  proposes to significantly reform that connection.

 

To view or download copies of Bailey’s Center for Rural Affairs testimony go to:

 

LB 280 [http://www.cfra.org/Testimony-LB-280]

LB 357 [http://www.cfra.org/Testimony-Opposition-LB-357]

 

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