Proposal Would Lower Income Taxes, Tax More Services

Aug. 17, 2021, midnight ·

Jim Smith, Owen Palm, Jim Griesch and Lance Fritz of Blueprint Nebraska
Jim Smith, Owen Palm, Jim Griesch and Lance Fritz of Blueprint Nebraska at news confererence Tuesday (Zoom screenshot)

More services would be taxed and Nebraska state income taxes would be lowered under a tax plan proposed by a business- oriented group Tuesday.

The group called Blueprint Nebraska has been working on ways to modernize the tax structure and grow the state since 2018. The plan proposed Tuesday includes lowering state income taxes, which currently have a maximum rate of just under 7 percent, down to just under 5 percent over 10 years. Incomes below $50,000 for an individual would be exempt from state income taxes. The top corporate rate would drop from just under 8 percent to just under 5.

The plan would also expand the sales tax to cover more services, including construction, home repair, motor vehicle repairs, legal and accounting services. And it says property taxes would decrease as local sales tax receipts grow. Blueprint’s Jim Griesch said the group expects, if approved, the proposed changes would spur 65,000 new jobs and residents.

“We have a people problem in Nebraska. This plan was designed to attract more residents,” Griesch said.

The plan drew immediate criticism from the Open Sky Policy Institute, which expressed concern that many low- and middle-income families would pay significantly more in taxes.

Griesch predicted the opposite.

“There is no question that, based on the data, the under-50,000 taxpayers see significant benefit from this plan. And as you grow in income level where the propensity for spending increases, of course there are some things that they would pay additional tax on. But the tax plan as we’ve articulated it is, quite frankly, very progressive, meaning that the higher the income level, the greater the amount of the burden is borne by those folks with the propensity to spend,” he said.

Jim Smith of Blueprint Nebraska said the group will now hold a series of public meetings across the state to discuss the proposal, and then it will be up to the Legislature and the governor to decide what to do.