The Tax Modernization Committee staff issued a draft of the committee's recommendations. I included my opinion on each.
On Property Tax-
- Increase the state aid commitment to schools to offset property tax use and reduce property taxes as a share of total state and local taxes; (Support)
- Reduce agricultural land value percentages to reduce the rate of tax on this value; (Very Much Support)
- Raise homestead exemption program income guidelines to increase the number of persons who would benefit from this form of relief; (Support)
- Offset the regressivity of the property tax by providing property tax relief to households having a higher burden of property tax on their household income. Consider circuit breaker programs for renters, high property tax burden households, and farm owner operators; (No Opinion)
- Recommend further study and analysis of residential valuation classification. (No Opinion)
Income Taxes-
- The income bands within the income tax brackets should be adjusted annually for inflation; (Support)
- While Nebraska's top marginal rate is high, the effective rate or tax burden is comparable to other states, both regionally and nationally. Accordingly, no adjustment to rates is recommended at this time. This is a policy matter for further analysis and discussion; (Support)
- The provisional income thresholds used to calculate taxable Social Security benefits should be raised to exclude more Social Security income for low income taxpayers. Further study of any additional exemption of retirement income is recommended before proceeding any further; (Support)
Corporate Income Tax.
- The first bracket should be indexed from $100,000 to $250,000 of taxable income at the rate of 5.58 percent. The top bracket rate of 7.81 percent would apply to the excess over $250,000. A threshold of $5 million net Nebraska taxable income should be established to recapture the benefit of the lower rate on the first $250,000 of taxable income. (Support)
Sales and Use Taxes
Repair and replacement parts for agricultural machinery and equipment should be exempt from sales and use tax. This recommendation was originally made by the Syracuse Study and should be implemented to make Nebraska more competitive with its surrounding states; (Support)
- Further review and analysis should be conducted to determine the appropriate consumer services to be added to the sales tax base. No business to business services should be taxed; (Support- some services should be taxed)
- Nebraska is the only one of the surrounding states that taxes residential utilities. It is recommended that refundable credit be implemented through the income tax system to offset the tax paid by low-income households; (Support)
-It is recommended that Nebraska amend its sales and use tax laws as necessary to ensure it is in compliance with all aspects of the Streamlined Agreement and the Main Street Fairness Act. (No opinion)
