News Release: Omaha senator introduces Blueprint Nebraska tax modernization plan

MEDIA AVAILABILITY with the Platte Institute

Attachment:
Survey Results

Contact: Adam Weinberg
(402) 500-0209
aweinberg@platteinstitute.org

Omaha senator introduces Blueprint Nebraska tax modernization plan,
poll shows 70% of Nebraskans agree taxes & workforce are linked

LINCOLN, NE — Nebraska state Sen. Mike McDonnell, of Omaha, has introduced a major proposal for tax modernization in Nebraska with Legislative Bill 1264. The bill aligns with recommendations made by Blueprint Nebraska, a statewide economic initiative the Platte Institute joined in 2021.

LB1264 would eliminate state income taxes on the first $50,000 earned by workers and retirees, move the state to a flat personal income tax rate, and provide funding to increase property tax relief by an additional $2 billion over the next decade. These changes would be funded through eliminating sales tax exemptions, itemized income tax deductions, and most corporate tax credits. In the place of current tax incentive programs, LB1264 would double the state’s support of its Research & Development tax credit and create a new student loan relief incentive for high-demand trades and careers.

“LB1264 is about growing our workforce by making our state a better place to earn a paycheck, own property or a business, get an education, and put your education to work,” Jim Smith, Chief Strategy Officer of the Platte Institute, said.

“This legislation was created with input from Nebraskans all across the state, with the goal of creating a nonpartisan plan that benefits both urban and rural communities,” Smith said.

Throughout the Blueprint Nebraska strategic planning process launched in 2018, participants identified reducing or eliminating taxes as a Top 3 concern for the state’s economic vitality. Recent Platte Institute polling shows a large majority of Nebraskans agree that there’s a link between Nebraska’s tax policies and its challenges with retaining and attracting job seekers.

A total of 69% of Nebraska voters agreed that reducing taxes will help Nebraska compete with other states, and 70% agreed with a proposal to eliminate state income taxes on the first $50,000 individuals earn.

Jim Smith is available for comment on these results, and more details and analysis are available at PlatteInstitute.org on both poll questions. The complete results for these survey questions are attached. This content may be republished in whole or in part with attribution to the Platte Institute and its staff.

Notably, 79% of Republicans, 57% of Democrats, and 66% of independents were in support of making the first $50,000 of Nebraskans’ earnings free of state income tax. Younger voters age 44 and under were also the most likely age group to favor this policy, with 77% in support. Eighteen percent of younger voters disagreed with the idea, with only 3% strongly disagreeing.

The results were part of a larger telephone survey of 812 registered Nebraska voters that was conducted in December 2021 by the polling firm Cor Strategies. The poll has a margin of error of 3.44%.

U.S. Census Bureau data collected since the early days of the COVID-19 pandemic also show states with more competitive tax systems are gaining more new residents at the expense of higher-tax states as Americans change careers and take advantage of remote work opportunities.

“[I]n the top one-third of states for population growth since the start of the pandemic (April 2020 to July 2021 data), the average combined top marginal state and local income tax rate is 3.5 percent, while in the bottom third of states, it is about 7.3 percent,” writes Jared Walczak, Vice President for State Projects at the Tax Foundation, in a recent article at TaxFoundation.org. Walczak also spoke on this topic on a recent episode of the Platte Institute podcast, Nebraskanomics.

Key facts about LB1264

• Nebraska’s wealthiest taxpayers will pay more taxes under LB1264, but at competitive tax rates more comparable to Nebraska’s peers and neighbors. Taxpayers earning $50,000 a year or less will realize reductions in their overall tax burden by an average of 22%.
• The framework the bill is based on was independently analyzed by Regional Economic Models, Inc. (REMI). Under the Blueprint tax modernization plan, REMI projects Nebraska would retain or attract more than 70,000 additional residents over the next decade. The same model shows the tax changes in LB1264 would broaden the tax base while reducing tax rates, raising nearly $470 million more in revenue than the current tax system over ten years.
• LB1264 proposes to create two new student loan relief programs with the goal of recruiting or retaining 12,000 high-skill and manufacturing graduates over the next decade. Graduates in these fields will be eligible to claim student loan relief for up to 5 years.
• LB1264 would not change the current state or local sales tax rate, and the current sales tax exemption for food would remain in place.

To schedule an interview on this topic, 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. More media resources are available at PlatteInstitute.org/Media.