Some facts about LB 337 — the governor’s tax plan
Below are some facts regarding, LB 337, the governor’s income tax cut plan:
- The example middle-class Nebraska taxpayer used to roll out the plan would not receive a tax cut under LB 337. Once the standard deduction is applied, this taxpayer, who earns $29,831, would not pay the top tax rate on any income, and therefore would not receive a tax cut.
- An individual taxpayer would need to earn at least $36,181 to receive tax cut. And then only $1 would be subject to the tax cut. A married couple filing jointly would have to earn $72,361 to receive tax cut, and again, only $1 would be subject to tax cut.
- Cutting the top income tax rate as proposed in LB 337 will provide the largest tax cut for the wealthiest Nebraskans while providing much more modest tax reductions for middle-class residents.
- An Institute on Taxation and Economic Policy analysis shows the average annual nominal tax cut for the wealthiest 1 percent of Nebraskans would be $5,810 while the average nominal reduction for the middle class would be $39.
- Middle-class Nebraskans have seen tax rate cuts in the past 20 years. LB 970 in 2012 reduced rates for three of the state’s four tax brackets, including the two middle income tax brackets. Furthermore, LB 987 in 2014 indexed Nebraska’s income tax brackets for inflation. Legislative Fiscal Office data show income tax cuts over the last decade have reduced General Fund revenue by $268 million in FY17 alone.
