Property Tax Relief, Niobium Tax Among Legislative Proposals

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January 14th, 2015

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Lincoln, NE – Proposals for property tax relief were among ideas discussed as senators continued to introduce bills in the Nebraska Legislature Tuesday.

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Kevin Cooksley of rural Broken Bow comes from a family that’s been ranching there since the 1870s. In recent years, Cooksley said, property taxes have taken an increasing toll. “What has transpired in the last five year has been…shocking,” Cooksley said. “Before my mom passed away in 2011, she had written on the tax statement that came, ‘This is outrageous.’”

Cooksley said during that time, the family’s gross ranching income has increased about 4.5 percent a year, while property taxes have increased about 15 percent a year.

Older Nebraskans are another group hard hit by property taxes, said Mark Intermill of AARP Nebraska. “When we survey our members about the tax burdens that they feel the most heavily, consistently property tax is the one that rises to the top,” he said.

Cooksley and Intermill  were among those who appeared at a news conference to support a proposal to be introduced by Sen. Al Davis of Hyannis. It would create a local income tax to support schools, which use about two-thirds of all property taxes collected in Nebraska. Renee Fry of the Open Sky Policy Institute explained how it would work. “It’ll just be another line on your income tax where you’ll calculate – you’ll look at what your liability was for the year and you’ll calculate an additional 19.4 percent that will go to your local school district,” she said.

Davis said that would lower property taxes by about 25 cents per $100 of valuation. That would save the owner of a house valued at $100,000 $250 a year. “We’re replacing revenue with income tax, yes. But the average person in the state …will see a reduction in the overall dollars of tax that they have to put out, Davis said, adding “There will be some people who are upset about having to pay a higher income tax.”

The proposal is sure to generate opposition from people who say Nebraska should reduce income tax rates in order to attract new business and higher-paying jobs.

Meanwhile, Lincoln Sen. Kate Bolz introduced a bill with a somewhat different approach. Bolz says her idea is designed to protect people from the shock of higher property taxes. “This would ‘break the circuit’ by providing an income tax credit when a home valuation and a property tax bill goes up significantly and income stays the same,” she said.

Under Bolz’ proposal, LB186, income tax credits would be available to both homeowners and renters, on a sliding scale worth more to people with lower incomes.

Yet another tax proposal by Davis, LB201, would institute a tax on the rare earth mineral Niobium, which is used in everything from jet engines to pacemakers. Developers have said there is a significant deposit of Niobium near Elk Creek in southeast Nebraska, although tests are still being conducted to determine the commercial viability of mining it.

Davis said now is the time to set up a tax. “We have a potential source of Niobium in southeast Nebraska – undeveloped at this point, (that) probably will be developed. I think it’s easier to … establish the taxing rates on a product like that before the company gets the plant running. I think it’ll be harder to do afterwards,” he said.

Supporters of Niobium development have argued that setting a tax before mining is established could discourage development of the industry.

Grand Island Sen. Mike Gloor, chairman of the Revenue Committee which oversees tax legislation, said all the ideas being proposed involve tradeoffs. “There are always winners and losers. There is always a redistribution. And if that weren’t the case, why do we go through this exercise?” he said. “It’s a challenge to sit down and sort it all out. But that’s the responsibility of the committee once we get all these proposals.”

Proposals will continue to be introduced for the remaining five days of bill introduction.

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