Corporate income is a factor to state’s continued revenue growth
April is a very important month in the government world. Typically, that is when the tax filing deadline occurs, and budget writers get to see if the state collected as much tax revenue as they anticipated. However, this has been slightly altered for 2021, with Nebraska electing to extend the filing deadline to May 17, 2021 to match the deadline the IRS announced for federal returns.
And the next revenue forecasting meeting will undoubtably be a positive one, given the strong tax revenues posted for the state. For the month of March, the state of Nebraska collected $566 million, which is 12.1% above the certified forecast. And for the fiscal year, the net General Fund revenues are $4.133 billion, which is 15.6% above the certified forecast.
Here is the fiscal year breakdown:
- Net Sales and Use Tax – 12.6% above forecast
- Net Individual Income Tax – 18.1% above
- Net Corporate Income Tax – 19.8% above
- Net Miscellaneous Taxes – 3.4% above
To put these figures in context, the forecast these revenue numbers are compared to was set in August 2020, when there was much more uncertainty about our economy regarding the ongoing pandemic. According to Nebraska law, only downward revisions to the forecast are certified, so the comparisons made for the month of March are still using the figures from August 2020.
That’s why I’m going to do a quick comparison to this same time last year and also to 2019.
In March 2020, the net fiscal year revenues were $3.656 billion and in March of 2019, the net fiscal year revenues were $3.267 billion. Well, its clear the state is collecting more and more revenue each year, but what about each specific tax – what is causing this continued growth even during a pandemic?
From the table, the corporate income tax seems to be the main catalyst for the continued revenue increases over the last few years. This is a good sign for lawmakers as they attempt to reduce the top corporate income tax rate to match our personal income tax rate because it shouldn’t affect the revenues in a negative way.