Feb. 23: News Conference and Hearing on Blueprint Nebraska Tax Plan
NEWS RELEASE from the Platte Institute
Contact: Adam Weinberg
(402) 500-0209
aweinberg@platteinstitute.org
TODAY: Omaha senator and Blueprint Nebraska leaders present tax modernization bill
LB1264 lets Nebraskans earn $50,000 free of state income tax, offers student loan relief
LINCOLN, NE — A bill proposed in the Nebraska Legislature aims to recruit and retain more workers and residents in the state by letting people earn $50,000 free of state income tax and creating new student loan relief programs for graduates in STEM and manufacturing fields. Nebraska state Sen. Mike McDonnell is the introducer of Legislative Bill 1264, which will be heard in the Legislature’s Revenue Committee. McDonnell will be among the speakers at a State Capitol news conference prior to the hearing TODAY, Wednesday, February 23 at 12:30 p.m. Central Time.
The news conference will be held in the Nebraska State Capitol Rotunda, which is on the second floor of the State Capitol at 1445 K Street, Lincoln, NE 68508. Sen. McDonnell will be joined by Blueprint Nebraska co-chair Owen Palm, Platte Institute Chief Strategy Officer Jim Smith, Blueprint Nebraska Taxation & Incentives Industry Council Chair Jim Greisch, and Platte Institute Chief Executive Officer Jim Vokal.
The news conference will be followed by a Revenue Committee hearing for LB1264 at 1:30 p.m. Central Time in State Capitol room 1524. A livestream of the hearing is available courtesy of Nebraska Public Media. The bill is currently first on the committee agenda. In addition to the aforementioned speakers, Blueprint Nebraska co-chair and Union Pacific Chairman, President, and Chief Executive Officer Lance Fritz will testify in support of LB1264 at the hearing.
LB1264 contains the tax modernization recommendations of the Blueprint Nebraska economic initiative. Launched in 2018 by Nebraska business and civic leaders, the campaign relied on input from Nebraskans through surveys, public forums, and volunteer councils to create 15 initiatives to grow Nebraska’s workforce and population, including economic analysis and development of a proposal for a new tax structure.
The Blueprint Nebraska tax modernization plan proposes to eliminate state income taxes on the first $50,000 individuals earn, or $100,000 for a married couple filing their taxes jointly. Nebraska’s top individual and corporate income tax rates would also be reduced to 4.99% by 2028. Additional revenues raised by the changes would increase property tax relief by additional $2 billion over the next decade, eliminate the county inheritance tax, double the state’s Research & Development tax credit, and establish two new student loan relief programs for recent graduates in STEM and manufacturing fields. The changes would be funded by broadening the state tax base through eliminating sales tax exemptions, while maintaining the current sales tax rate and the sales tax exemption for food. The plan would also end itemized income tax deductions and repeal most corporate tax credits.
As part of a December 2021 telephone poll of 812 Nebraska voters, 67% of respondents said they support the Blueprint Nebraska plan, including 73% of Republicans, 63% of Democrats, and 60% of independents. Previously released results from the same survey showed 70% of respondents agree that eliminating state income taxes on the first $50,000 of income would help Nebraska compete with other states. Sixty-nine percent also said student loan relief programs made them more likely to support the plan. The most recent survey results are attached to this release, with more analysis from Platte Institute CEO Jim Vokal at PlatteInstitute.org/Polls.
Notably, the youngest group of voters surveyed, age 44 and under, were even more likely to support the Blueprint Nebraska plan than older respondents. Seventy-two percent of voters age 44 and under support the Blueprint Nebraska plan, compared with 63% of voters age 45-64, and 67% of voters age 65 and older. In addition, 77% of voters in the youngest age group said eliminating income taxes on the first $50,000 individuals earned would help Nebraska compete for workers.
The changes proposed in the Blueprint Nebraska framework were independently analyzed by Regional Economic Models, Inc. (REMI), an economic modeling firm often hired by state revenue departments and legislatures to project the economic and fiscal effects of tax policies. REMI estimates that tax modernization would increase Nebraska’s population by an additional 70,000 residents beyond current projections by 2031 and increase personal incomes in the state by more than $40 billion over the same period of time. The economic model also estimates changes in the tax burden based on income level, and projects the Blueprint Nebraska plan would yield a strongly progressive change, with taxpayers earning less than $50,000 expected to see an average reduction in tax burden of greater than 20%.
These are statements on LB1264 and the Blueprint Nebraska tax modernization plan:
Nebraska state Sen. Mike McDonnell, State Legislative District 5: “LB1264 offers a vision for tax modernization that would give Nebraska the best balance of economic opportunity, fairness, and financial strength. Our goal with this bill is not simply cutting taxes, but changing the incentive structure in Nebraska to become the best state for working families to get an education, earn a paycheck, and put down roots. When it comes to recruiting middle-class residents, LB1264 will allow Nebraska to compete with any state on income taxes. But that’s not the only way we’re investing in our workforce with this bill. Because LB1264 raises new revenue for the state, we’ll have the resources to establish two new student loan relief programs and encourage investments in technology and innovation that can grow opportunities in Nebraska’s most promising and rewarding industry sectors.”
Blueprint Nebraska Co-Chair Lance Fritz: “Our plan proposes lowering the income tax rate to make Nebraska more competitive. It does this while also eliminating the income tax burden for many Nebraskans. I am extremely proud that our data show this overall framework is indeed not a tax break for the rich and actually makes the overall tax structure even more progressive than it is today. Our plan will grow our workforce and investment in Nebraska both by competitive tax rates and targeted R&D incentives.”
Blueprint Nebraska Co-Chair Owen Palm: “Nebraskans involved in the Blueprint process see the great power of Nebraska’s land and location. But we also know our state has some systemic challenges that will inhibit future generations from enjoying the Good Life, unless we act now to create a more robust, competitive business climate that includes a strong and prosperous workforce. LB1264 offers a bipartisan, pragmatic approach to modernizing our 1960s-era tax code and growing our workforce and population.”
Blueprint Nebraska Taxation & Incentives Industry Council Chair Jim Greisch: “Nebraska needs to bring its economic development policies into the 21st century and incentivize the talent and innovation that our state needs to compete. Our state faces the risk of falling behind by standing still, while our competitors sprint towards policies that will welcome many more people to join their workforce. State senators can help build a more competitive Nebraska by taking bold action with LB1264.”
Platte Institute Chief Strategy Officer Jim Smith: “Economic modeling shows LB1264 produces the growth that every Nebraska policymaker wants to see in Nebraska, and that growth is realized in every region of the state. Over ten years, this plan is estimated to recruit or retain 70,000 additional residents to the state, an increase of over $65 billion in Gross State Product, and $40 billion in personal income growth. The largest projected increases in economic output by industry are in food manufacturing, agriculture, and real estate, while the greatest increase in investment will be in construction, real estate, and computer and electronic product manufacturing. These are all critical areas for creating the opportunities and amenities that will make Nebraska communities statewide even more desirable places to live and work.”
Platte Institute Chief Executive Officer Jim Vokal: “Nebraska needs more workers earning paychecks, more housing, and more investment. And yet relative to many of our peers, our tax system seems to say the opposite. Since the beginning of the pandemic, the country has seen a significant population shift toward states that are prioritizing the types of policies offered by LB1264. Nebraska would be better positioned to benefit from these trends if LB1264 was the law, and surveys of Nebraskans show voters are ready, across party lines, for an ambitious strategy for growing the state.”
To schedule an interview on this topic or for more information, please contact Adam Weinberg at (402) 500-0209 or aweinberg@platteinstitute.org.
The Platte Institute advances policies that remove barriers to growth and opportunity in Nebraska. Visit PlatteInstitute.org/Media to find more Platte Institute media resources.