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Nebraska Ag News Headlines
Ricketts Proposes Tax Reform for Nebraska
Nebraska Ag Connection - 01/11/2018

"Tax reform is a key priority to grow Nebraska. The Nebraska Property Tax Cuts and Opportunity Act will serve as a framework that can help deliver tax relief for hardworking Nebraskans. Tax relief will need to be a bipartisan effort, and it will be something we come together to do to grow the entire state," Nebraska Governor Pete Ricketts said in his state of the state address. In addition, he made the following recommendations for tax reforms that he claims will benefit families and farmers and ranchers.

Ricketts claims Nebraska's tax laws are hurting hardworking Nebraska families and ag producers, and consequently hindering the ability of the state to grow in the future.

- Nebraska's property and income tax rates are nationally uncompetitive. The Tax Foundation ranks Nebraska's property taxes as 11th highest in the nation and income tax as 26th highest.

- Nebraska's property and income taxes are regionally uncompetitive. Nebraska ranks worst among surrounding states for property taxes. The only surrounding state with an income tax rate higher than Nebraska is Iowa.

- While the U.S. Department of Agriculture projected farm income to stabilize in 2017, this follows three years of steep declines, leaving Nebraska's ag producers struggling to pay high tax bills. More here.

- State tax laws are a significant factor considered by businesses and site selectors when determining where to create jobs and make investments.

The Nebraska Property Tax Cuts and Opportunity Act will deliver over $4 billion in property tax relief over 10 years for Nebraska's ag producers and families, Ricketts claims.

- Restructures existing property tax credits to prioritize middle-income Nebraska homeowners and ag producers.

o A new refundable tax credit will ensure that Nebraskans receive the property tax relief provided by the state.

- Property tax relief will now be delivered as a credit on state taxes, to ensure Nebraska property taxpayers receive relief.

- Out-of-state landowners won't receive the tax credit--unless they file their income taxes as Nebraska residents.

- For residential homeowners, the plan targets relief at middle and low income earners by capping the amount of property tax relief at $230 per residential homestead.

- For farmers and ranchers, the plan provides a tax credit on agricultural land, farm sites, and improvements equal to 10 percent of property taxes paid with no cap on the amount of relief.

- When state revenues reach certain benchmarks, triggers are in place to increase the amount of credits. The cap on the residential credit will increase as the credits increase.

The plan ensures Nebraskans would see more property tax relief, Ricketts claims, adding that currently, 6% of property tax credits on homes are received by non-Nebraska residents and 14% of property tax credits on agricultural land are received by non-Nebraska residents.

Ricketts went on to claim that the Nebraska Property Tax Cuts and Opportunity Act builds a better climate for job creation and commits new funding to workforce development.

- Uses existing tax credits to lower the top individual income tax rate from 6.84% to 6.69%.

o Nebraska Department of Revenue analysis shows that 90 percent of taxes paid by individuals are paid in the top tax rate, which starts at $29,800 for individuals.

o According to the Nebraska State Chamber, 90% of businesses in Nebraska pay income tax through individual returns.

o Lowering the rate will help many of the small businesses and farms in Nebraska organized as S Corporation, Nonfarm Sole Proprietorships, and Farm Sole Proprietorships.

According to the U.S. Small Business Administration, Nebraska's small businesses employ about half of the state's private workforce, Ricketts said.

- Converts existing tax credits going to businesses to reduce the state's business tax rates from 7.81% to 6.69% to make Nebraska more competitive.

o Nebraska has the highest corporate tax rate of any regional state excepting Iowa and the 23rd highest rate in the nation.

o This reform has no general fund impact this biennium and is critical to making Nebraska a more attractive place for site selectors who screen for tax rates when locating new projects.

o Using existing tax credits to pay down the state's corporate tax rate makes the state more attractive to businesses and site selectors considering Nebraska to bring new jobs and grow.

- Commits $10 million over two years to bolster state workforce development programming.

o Right now, the state has no job training funds in the state's traditional programs, such as Intern Nebraska.

o Nebraska's job creators consistently identify workforce development as a top priority. Workforce quality and availability of labor topped the Nebraska State Chamber's annual member survey in 2017.

o Nebraska has one of the lowest unemployment rates in the nation at 2.7%, which has forced the state to seek creative solutions to talent recruitment and workforce development.

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