The Nebraska Department of Revenue laid out some changes to the federal income tax code for the Legislature's Revenue Committee that could cause a loss of state revenue in the next few fiscal years.Â
That money would go back to income tax payers, both individuals and businesses, through changes in the federal tax code.
The amount overall is estimated at a $125.6 million loss of revenue for Nebraska in fiscal year 2020-21. In the two following years, the losses could be about $67 million in 2021-22, and $57 million in 2022-23. Â
But some Revenue Committee members say they could forgo those revenue losses based on income taxes in order to have money to return to property tax payers.Â
The coronavirus relief bill triggered income tax changes, such as a modification of limits on excess business losses for other than corporate taxpayers and changes to limits on contributions to charities during 2020.
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State income taxes are figured on the federal adjusted gross income for individuals and businesses. So to avoid that revenue loss, Nebraska would have to cut federal ties in those tax years for figuring those state taxes.
The state did that "decoupling" from the federal tax code four years ago, said Revenue Committee Chairwoman Lou Ann Linehan. To do so again would require a hearing.
In an executive session, Sen. Mike Groene of North Platte asked why the state would need to give up the income tax revenue. Reducing property taxes would be more important to the state.Â
Later, he explained: "If we can give away $125 million, then let's give it for property tax relief. We believe that would be a bigger boost to the economy, putting money into every property owner's pocket on Main Street, rather than giving $125 million to a select number of businesses."
Attempts during the first part of the legislative session to agree on property tax cuts were unsuccessful. And the same senators who were part of that filibuster are returning when the Legislature reconvenes to finish out its short session, Linehan said.
There were not 33 votes for anything, she said. Regardless, senators have to come up with something that includes property tax relief.
The state got news recently that May revenue did not suffer near as much as predicted. It was down only 2.2%, or about $10 million from the certified forecast made 11 months ago.
"I have not seen people stop spending money," Linehan said. "The people that generate the vast amount of our tax revenue are people who have money. That group of people, they've adjusted to this and continue to make money."
Every poll shows people in this state want property tax relief, she said.Â
"We either get property tax relief done, or we're not going to get anything done in those 17 days (of the completion of the session)," she said. "I truly believe that.
"I do know how," she added, "but I haven't convinced enough people yet."