Latest news with #LegislativeBill468
Yahoo
29-04-2025
- Business
- Yahoo
Nebraska advances proposal to reduce inheritance tax as budget gap grows
State Sen. Robert Clements of Elmwood asks a question during a hearing on Oct. 27, 2023, in Lincoln. (Zach Wendling/Nebraska Examiner) LINCOLN — A proposal to decrease Nebraska's inheritance tax advanced Tuesday with a 27-10 vote. Nebraska is just one of six states that still has an inheritance tax. The Cornhusker State is the only one that sends inheritance tax revenue exclusively to counties, with much of it used to fund bridges and roads. Elmwood State Sen. Robert Clements' proposal would lower the inheritance tax rate to 1% for children and 3% for distant relatives and non-relatives, but would not eliminate the tax. It would replace lost county revenue by increasing county fees, adding to the costs of motor vehicle inspections and marriage licenses. The proposal also would cost the state $3 million a year in projected revenue over the next two fiscal years, as it would increase the county's share of the state's insurance premium tax, at a time when the state budget shortfall continues to grow. It would increase fees on property and asset seizures to cover personal debts, advertising for delinquent properties, a higher tax on renewable energy generation, and it would eliminate some business tax breaks. Clements said his proposal, Legislative Bill 468, would help attract people to move to Nebraska and make the inheritance tax rate fairer. The Nebraska Association of County Officials, which backs the Clements bill, estimates the proposal could increase county revenues by roughly $8.9 million. Currently, Nebraska imposes a 1% tax on inheritances exceeding $100,000 for children, parents, and siblings. Higher tax rates are charged to more distant relatives — 11% for aunts and uncles and nieces and nephews after a $40,000 exemption. Non-relatives would have to pay 15% after a $25,000 exemption. Nebraska Taxpayers for Freedom and the Nebraska Republican Party testified in support of the bill during its hearing in February, saying it would end the state's 'outlier' status in imposing an inheritance tax and stop wealthy residents from moving away to avoid the tax. 'Nebraska is losing retirees faster than we are gaining population from other states,' Clements said. 'Our inheritance tax contributes to this migration. I believe we can do better as a state in this area and give people more reasons to stay in our state.' State Sen. George Dungan of Lincoln said the debate on the inheritance tax continued the theme of the state 'balancing budgets on the backs of everyday hard-working Nebraskans.' Lincoln State Sen. Eliot Bostar filed two failed amendments: One would have eliminated the inheritance tax without replacing the revenue, and another would have let counties increase local sales taxes to make up the lost revenue. Bostar said that when he started in the Legislature, he had a misunderstanding about who paid the tax. 'There are a lot of fairly trivial things that if you have enough resources, you can do in order to avoid paying this tax,' Bostar said. 'So that leaves everyone in the middle.' Lincoln State Sen. Jane Raybould also had a failed amendment that would have tweaked the tax rates of the new proposal. She emphasized the 'unintended consequences.' Lawmakers have expressed concerns in the past that eliminating the inheritance tax could lead to higher property taxes but said Clements' proposal strikes a 'nice balance' of helping replace the lost revenue. 'I don't think there's any perfect way to reimburse, dollar for dollar, the counties for any lost revenues resulting from the changes proposed in the inheritance tax,' Syracuse's Sen. Bob Hallstrom said. But Hallstrom praised the Clements proposal's balance. Lawmakers on both sides of the aisle raised issues about the increase in other fees and taxes to make up for lost county revenue. A few Democratic-aligned lawmakers expressed concerns about the measure's proposed increase in the nameplate capacity tax on renewable energy sources and its impact on school revenue. LB 468 would nearly double the nameplate capacity tax from $3,518 per megawatt of electricity generated to $6,560 per megawatt. 'I think that I would say it's pretty hard to be doubling this [Nameplate Capacity] tax to me,' Omaha Sen. Margo Juarez said. Some Republican-aligned lawmakers expressed worries over the elimination of some business incentives and the tax exemption for data center equipment. The bill also would do away with tax breaks in the ImagiNE Act for data centers and modernizing large businesses. Clements said school revenue wouldn't be negatively affected because of the increase in fees. Nebraska's budget shortfall, at least in part, is due to tax cuts that lawmakers passed in recent years. Throughout the session, lawmakers have proposed scaling back various tax incentive programs, reducing the state's school retirement contributions by $80 million, and increasing taxes on nicotine pouches. Clements said he would propose amendments to address lawmakers' concerns about where the inheritance tax replacement revenue comes from. He said he wants to eliminate the tax next year. 'Just because he's been committed to the issue for many years,' said Sen. Danielle Conrad of Lincoln said of Clements' proposal, 'it doesn't mean that this proposal results in good policy.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
06-02-2025
- Business
- Yahoo
Latest Nebraska effort to cut inheritance tax generates new opponents
State Sen. Robert Clements of Elmwood asks a question regarding nuclear energy during a hearing Oct. 27, 2023, in Lincoln. (Zach Wendling/Nebraska Examiner) LINCOLN — State Sen. Rob Clements of Elmwood has pushed during his eight years in office to eliminate the state's inheritance tax, maintaining that it's an unfair and outdated tax after death that only five states still impose. But his latest proposal, while tending to mollify one longtime opponent, inspired a new group of business and government entities to object during a 2 1/2-hour public hearing on Wednesday at the Capitol. Representatives of data centers, renewable energy projects, Nebraska's two largest counties, and the Nebraska Chamber of Commerce opposed Clements' Legislative Bill 468. The technology and energy company representatives argued it would blunt development of new data centers and energy sources at a time when President Donald Trump is encouraging increased investment in both parts of the economy. Representatives of Douglas and Lancaster Counties said both would be forced to raise local property taxes to cover funding lost under the bill. 'We do not like inheritance tax, but we dislike property tax more,' said Lori Pirsch, budget and finance director for Douglas County. That prompted Clements, who heads the Legislature's influential Appropriations Committee, to tell Revenue Committee members to explore other options to reduce or eliminate the inheritance tax, which provides about $93 million a year in revenue to the state's 93 counties — about 10% of counties' total revenue. 'We'd love to have someone come up with the silver bullet on how we can eliminate inheritance taxes,' Clements said. 'It does create a complex bill when we try to chip away at it.' LB 468 would chip away at the tax, a year after the senator's attempt to fully phase out the state's inheritance tax was shot down, mostly following opposition from the Nebraska Association of County Officials (NACO), which represents counties. NACO argued then that it would increase property taxes unless some replacement revenue was found to sustain county services. Nebraska imposes a 1% inheritance tax on children, parents and siblings for inheritances exceeding $100,000. Higher tax rates are charged to more distant relatives — 11% for aunts and uncles, nieces and nephews after a $40,000 deduction — and non-relatives — and 15% after a $25,000 deduction. All the revenue goes to counties, with much of it used to fund bridges and roads. In Douglas County, it's used to fund social services. In Lancaster County, it's used to lower property taxes. LB 468 would lower the inheritance tax rate to 1% for distant relatives and non-relatives but would not eliminate the tax. That, supporters said, would eliminate the wide disparity in tax rates and make it less likely that those inheriting farmland would have to sell land to pay the tax. To replace the estimated loss of $33.8 million a year in inheritance taxes for the counties, Clements proposed a series of increases in fees collected by the counties, including those to inspect motor vehicles, register home sales and get married. He also proposed increasing the 'nameplate capacity' tax on wind farms and eliminating a sales tax break for data centers. NACO, which was conditionally supportive of LB 468 if replacement revenue was included, estimated that the 10 fee increases and tax reallocations in the bill would generate $42.7 million in revenue, more than offsetting the decline in inheritance taxes. Nebraska Taxpayers for Freedom and the Nebraska Republican Party were among the groups supporting the bill, saying it would end the state's 'outlier' status in imposing an inheritance tax and stop wealthy residents from moving away to avoid the tax. One supporter of LB 468 testifying Wednesday compared the tax to 'vultures circling a carcass.' But representatives of Douglas and Lancaster Counties said the replacement revenue planned in LB 468 would fall short of reimbursing them for the loss of inheritance taxes, which bring in about $20.7 million a year and $7.8 million a year, respectively. The two counties, they said, would have no other choice but raise property taxes, which they do not want to do, or cut services, which, they said, no one is calling for. The bill was also described as a 'tax shift,' because relatively few people pay the inheritance tax, while many would pay the increased fees. Clements said he based his proposed increase on taxing wind farms to the rise in local property taxes landowners have faced since the nameplate capacity tax — a replacement for property taxes — was first implemented in 2011. Since then, property taxes have risen 86%, according to the senator, while the nameplate capacity tax has remained the same. LB 468 would nearly double the nameplate capacity tax from $3,518 per megawatt to $6,560 per megawatt. The bill also would do away with tax breaks in the ImagiNE Act for data centers and modernizing large businesses, which Clements said would be offset by recent reductions in the state's corporate income taxes and property taxes. A representative of Invenergy, who said the company generates 20% of the state's renewable energy, suggested that lowering the tax rate should be considered, because the infrastructure costs of developing wind farms — which served as a basis for setting the nameplate tax rate — had dropped by 42% in recent years, but the taxes had stayed the same. Kevin Quinn of Invenergy said that increasing taxes on wind and solar farms would be a disincentive to new development here at a time when other states are lowering such taxes. He recommended a study of the level of the nameplate capacity tax before making any changes. The Revenue Committee took no action on LB 468 following its public hearings on Wednesday.
