Calls for bold, sweeping tax relief for middle class taxpayers
Gov. Dave Heineman delivered his State of the State address today focusing on tax relief for hard-working, middle class Nebraskans. The Governor’s plan will provide $326.6 million in tax relief over three years. This builds upon the tax relief efforts in 2007, when the Governor signed into law the largest tax relief package in the history of the state.
“Our highest priority should be tax relief for Nebraska’s hard-working, middle class taxpayers,” said Gov. Heineman. “Our proposal lowers rates and expands the brackets so that Nebraska’s hard-working taxpayers can keep more of their income.”
The Governor highlighted the progress made in Nebraska’s tax climate improving from 45th to 29th since 2006 in the Tax Foundation’s state rankings. However, Gov. Heineman noted that there is more work to be done and middle class Nebraskans need tax relief.
Gov. Heineman is proposing individual income tax relief by lowering rates and expanding brackets; helping small businesses grow by lowering the top corporate tax rate to the same rate as the top individual rate; and repealing the inheritance tax. Currently, Nebraska is one of only 8 states with an inheritance tax.
Nebraska was recently named in Forbes Magazine as a State where not to die in 2012. Gov. Heineman said, “Even high tax states like Massachusetts, New York and California don’t have an inheritance tax.”
The Governor’s proposed tax relief plan will provide $326.6 million in tax relief over three years, beginning January 1, 2013, with $273.7 million going to individual income tax and $52.9 million for Nebraska businesses.
For example, tax relief for Married, Filing Jointly would be as follows:
Bracket 1 - Expand from $0-4,800 to $0-6,000 & Lower rate from 2.56% to 2.42%.
Bracket 2 - Expand from $4,800-35,000 to $6,000-36,500 & Lower rate from 3.57% to 3.40%.
Bracket 3 - Expand from $35,000-54,000 to $36,500-60,000 & Lower rate from 5.12% to 4.90%.
Bracket 4 - Expand from over $54,000 to over $60,000 & Lower rate from 6.84% to 6.70%.
Corporate income tax relief would lower the tax rate for income over $100,000 from 7.81% to 6.70%.
During the 2011 legislative session the Nebraska Legislature enacted a biennial budget for State government. The Governor’s recommendations for the 2012 legislative session include adjustments to those appropriations where emergencies or new cost estimates have been provided for state programs. The Governor’s recommendations reduce the current state budget by $29 million.
“The 2012 legislative session should focus its efforts to delivering tax relief to middle class Nebraskans and not to increasing the state budget,” added Gov. Heineman. “Our choice is between providing tax relief for hard-working, middle class taxpayers or more spending for special interest groups. I will fight for taxpayers.”
The Governor provided an update on Nebraska’s successful business incentive program, noting the cooperation with citizens and business leaders to dramatically alter Nebraska’s economic position. Since enactment of the Nebraska Advantage in 2006, approximately 270 businesses have committed to invest more than $ 5.9 billion and to create more than 19,500 jobs in Nebraska.
In addition to tax relief, the Governor spoke about child welfare reform, stating, “This is a very difficult challenge because no single one entity of government is totally in charge of the child welfare system. The focus must be to provide a more efficient delivery of services that helps our children. I am working with the leadership of your Health and Human Services Committee to develop a common sense plan of action for the future.”
The Governor addressed the challenges of President Obama’s federal health care reform and the implementation of health care exchanges, expressing the need for states to know the future Supreme Court decision on constitutionality of the law before implementing. That ruling is expected in June, following oral arguments in March.
Gov. Heineman said, “Our state has been working hard for nearly two years to protect Nebraska’s interests, and I want to assure you and our citizens that Nebraska will not default to the federal government regarding a health insurance exchange. The simple truth is it would be a costly mistake to spend millions of taxpayer dollars to begin implementing Obamacare until the United States Supreme Court makes its decision.”
Finally, Gov. Heineman continued his focus on jobs creation and creating more efficiency in state government with his proposal to merge the Department of Labor into the Department of Economic Development. Recently, Gov. Heineman named the current Labor Commissioner, Catherine Lang, to head this new merged agency.
“This is the opportunity for business, labor and state government to provide a more coordinated and an even greater focus on job creation, worker training and worker retraining,” said Gov. Heineman.