News Release: Income tax cut proposal exports millions out of state
For release: February 22, 2012
A new analysis conducted by OpenSky Policy Institute shows that $20-$26 million of the governor’s proposed income tax cuts would go to non-Nebraskans.
The governor’s proposal, LB 970, includes income tax cuts, corporate tax cuts and elimination of the inheritance tax, for a total cost of approximately $327 million to the state and $100 million to the counties over the next two and ½ years. The state faces a $343 million projected deficit during this same time, for a total budget gap of $660 million.[1]
Portions of the inheritance tax cut would also benefit non-Nebraskans, but the amount is not possible to quantify.
“At a critical time in Nebraska’s economic recovery, LB 970 would send millions of dollars out of state at the expense of the very things that will build Nebraska’s economy for future generations”, said Renee Fry, executive director of OpenSky Policy Institute.
For example, the amount of the income tax cuts going to non-Nebraskans would pay for the expansion of the nursing facility at the University of Nebraska-Kearney and the Veterinary Diagnostic Center request at the University of Nebraska Lincoln. “Instead of enriching non-Nebraskans, we should re-invest in education, infrastructure and health care here in our state. Reinvesting in Nebraska should be our number one priority” said Fry.
Even with a positive forecast from the Economic Forecasting Board on Friday, it is unlikely that the $660 million budget gap created by the governor’s proposal would be fully closed, meaning that budget cuts would have to be made in order to pay for the proposed tax cuts.
“While OpenSky believes tax reform is a laudable goal, it must be comprehensive, thoughtful and not come at the expense of Nebraska’s future. We believe it would be more prudent to wait until our economy has more fully recovered and there are fewer uncertainties facing our state,” Fry said.
OpenSky Policy Institute is a non-partisan, data-driven think tank focused on tax and budget policy in Nebraska. Our mission is to improve opportunities for every Nebraskan by providing impartial and precise research, analysis, education, and leadership.
Contact:
Renee Fry, executive director
OpenSky Policy Institute
(402) 250-4518
[1] By shrinking total revenues, the tax cuts would also decrease the amount that must be saved in the “minimum reserve” by $9.4 million. This is why the two numbers listed do not sum to the total.