NTF Issue paper: legwatch12.doc. 1-18.
NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:
LOBBY FOR THE 50-50 PROPERTY TAX RELIEF BILL.
BACKGROUND. High property taxes in NE are taxing people, especially senior citizens, out of their homes. Farmers and ranchers in the current economy cannot hold onto their land or consider passing landed inheritances from the 1800s to their children. For too long, the Legislature has tinkered with ideas for property tax relief but has failed to begin the process of passing substantive property tax reform and relief. Finally, conservative Sen. Steve Erdman has taken the challenge and is leading with his 50-50 plan in LB 829 as an excellent beginning for urban and rural property tax relief.
THE 50-50 PLAN. Beginning in January, 2019, every NE taxpayer will receive a refundable state individual income tax credit of 50% of the public school district taxes levied on taxpayer property. If the taxpayer does not owe income tax, or if income tax liability is less than the rebate, the taxpayer will receive a refund that one can save or spend. The rebate excludes local school bonded indebtedness* and tax levy overrides. The bill effectively reduces taxes paid by NE property owners by about $1.022 billion, or 30%. The NE property tax payment national ranking would drop from 5th highest to 25th. This legislation does not reduce the property tax levy of public schools or other local government units. However, LB 576, a companion bill sponsored by conservative Sen. Tom Brewer, would freeze property taxes for 4 years.
SKY HIGH PUBLIC SCHOOL TAXES. 2016 state tax figures show total school property taxes excluding bond issue taxes at $2.136 billion, school taxes on agricultural land, buildings, and farm sites at $683 million, school taxes on residences, including farm residences, at $961 million, and school taxes on personal property at $92 million.
50-50 EFFECT. The refundable income tax credit to ag property would equal $342 million, the credit to residential property $481 million, and the credit to commercial property $171 million. If including personal property, an additional $46 million extended to personal property owners. It would apply to all parcels of property. A small number of NE taxpayers who itemize deductions would see their tax credit subject to federal income tax. The tax refund would not become subject to Social Security taxation. Applying the figure of state population of 1.8 million in 2016 to real and personal property, the tax credit would equal about $585 per person.
EFFECT ON STATE GENERAL FUND. The reduction of $1.022 billion in state income tax receipts equals 42% of total individual and corporate income taxes paid in 2016 ($2.447 billion). To fill this deficit, NTF advocates serious cuts in the state budget (see our issue paper legwatch16.doc.), eliminating state income and sales tax exemptions, restricting tax increment financing, requiring every state agency and department to implement zero-based budgeting, and requiring ongoing employee desk audits to decrease the number of state employees.
TAKE ACTION NOW. LB 829 will have a public hearing in the Revenue Committee. Contact the following committee senators and urge them to vote to advance LB 829 to the full Legislature for full debate: Sens. Jim Smith, Curt Friesen, Mike Groene, Brett Lindstrom, Lydia Brasch, Burke Harr, Tyson Larson, and Paul Schumacher. Email netaxpayers@gmail.com for state senator contact information.
* local bonded indebtedness removed, because it would amount to taxation without representation. Taxpayers from other school districts would be paying, through their rebated sales and income tax dollars, for a portion of, for instance, a swimming pool at another school district.
Research, documentation, and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by other groups in the NE Conservative Coalition Network. 1-18. C.
TALKING POINTS FOR LOBBYING FOR LB 829:
Enough is enough! Nebraska has a higher property tax rate than New York, Massachusetts, and California.
LB 829 will stop the Legislature from continuing to load the property tax burden onto local property taxpayers.
This bill puts money back in the pockets of overtaxed Nebraskans who can spend it smarter and better than state senators.
Taxpayers easily can calculate their refundable tax credit on a post card.
The plan is easily explained and understood.
The tiny minority of Nebraskans who would pay federal tax on their refund would still receive a state refund.
This kind of property tax reform much needed, as taxes are rising faster than income, making ends harder to meet.
The Nebraska State Education Association will strenuously oppose this bill, even though many small NE school districts receive no state aid.
For the first time in NE history, NE urban and rural groups have joined together in a property relief proposal. Groups include our NE Taxpayers for Freedom organization, Metro Omaha Property Owners Association, NE State Property Owners Association, Papio Valley Preservation Association, NE Farm Bureau, NE Corn Growers, NE Sorghum Growers, NE Dairy Association, Reform for Nebraska, and several town chambers of commerce. This bill benefits ALL Nebraskans.
OTHER INFORMATION.
If the Revenue Committee does not advance LB 829 to the full Legislature, we must round up 25 senators to pull it out of committee, so stand ready to lobby your state senator to vote for advancement.
Plan to attend Conservative Day at the Capitol, Feb. 1, where you can lunch with senators and lobby them for the bill.
Be ready to rally at the Capitol Rotunda and testify on the day of the bill hearing in committee.