Projections showing future increases in retirement-aged Nebraskans and declines in working-age residents contribute to sustainability concerns about the full-exemption of Social Security income proposed on LB 825 – a bill before the Revenue Committee today.
The University of Nebraska-Omaha Center for Public Affairs Research projects the number of Nebraskans aged 65 and older will increase by more than 90% from 2010 to 2050.[1] At the same time, the number of Nebraskans aged 18 to 64 will only grow by 12%.[2] That will leave fewer workers supporting significantly more retirees.
The 2013 Tax Modernization Committee report found many states that exempted Social Security income have been pulling back on these exemptions due to demographic changes. It also found that the growing population of retired taxpayers and their exempt retirement income will put increasing pressure on state budgets to maintain such exemptions into the future.[3]
Enacting LB 825 could leave future Nebraska lawmakers with the unenviable choice of cutting services retirees rely on, like health care, public safety and good roads, or raising taxes, including rolling back the bill’s exemption, should state revenues lag.
Today’s Revenue Committee Hearing starts at 1:30 p.m. in the State Capitol, Room 1524. Nebraska Public Media will stream the hearing live.