Nebraska lawmakers to study tax issues over break

4/19/2014 7:15 AM
By Associated Press

LINCOLN, Neb. (AP) — Nebraska lawmakers approved more than $400 million in tax cuts this session, but they're ready to look for more changes in the state's tax structure in the months before next year's Legislature convenes.

Fresh off a session that saw $412 million in tax relief over the next five years, the Legislature's Revenue Committee plans to hold meetings this summer and fall to consider various tax issues.

"It's been a very good year for Nebraska taxpayers," Gov. Dave Heineman said in his end-of-session address to lawmakers.

Sen. Galen Hadley of Kearney, chairman of the Revenue Committee, said the most significant measures approved in the session that ended Thursday included changes to ensure tax brackets keep pace with inflation.

Other taxes changes approved by lawmakers exempted farm equipment parts and placed an additional $25 million annually into the state's property tax credit program.

Lawmakers said they're just getting started.

Sen. Paul Schumacher of Columbus, also a member of the Revenue Committee, proposed a study of whether to change part of the Nebraska Constitution that requires that the taxation of property be uniform and proportionate. That requirement makes it difficult to target tax relief, he said.

"The constitution really kind of limits what we can do," Hadley said.

For example, lawmakers wouldn't be allowed to target tax relief to an elderly person who lives in a nursing home and relies completely on farmland rent, Schumacher said. That person must now be treated the same as any other agricultural land owner.

Lawmakers also want to compare how Nebraska determines the taxable value of agricultural land to the process in other states.

In Nebraska, all agricultural land is taxed at 75 percent of market value. Some states base taxes off the money made from crops grown on the land, a system that is potentially more equitable to property owners.

Last session, lawmakers tried but failed to lower agricultural land valuations to 65 percent of market value. Supporters argued the move would help farmers, but opponents said the decreased tax payments could have left counties and schools with huge funding shortfalls.

The Revenue Committee's studies will continue the work undertaken by the Tax Modernization Committee last year. That committee conducted a six-month review of the state's tax structure and held public hearings across the state.

"We were unable, other than for increasing the property tax credit, to come up with any systemic solutions to the property tax issue," Schumacher said.

The panel also will compare Nebraska's income tax system with those in other states. Some states have been able to lower the income tax rate by doing away with some exemptions, Hadley said.

The committee will see if the rate can be lowered and still provide the money needed to run the government, Hadley said.

"We're trying to be equitable in the tax burden," Hadley said.


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