Taxes dominate Sidney legislative forum discussion

On Wednesday afternoon, the Cheyenne County Chamber of Commerce held the Nebraska Fall Legislative Forum.

The key areas of the forum revolved around taxation, affecting both businesses and individuals, economic development and labor relations (worker and unemployment compensation).

President of the State Chamber, Barry Kennedy said that most would agree that they are one of the elite entities in dealing with issues of economic development and the business end of labor relations.

“We call ourselves ‘Nebraska: The Good Life,’ but we find 650 things wrong with it every year depending on how many bills get introduced to change something,” Kennedy said.

In last year’s legislative session, the key business bills enacted were LB308, LB104, LB476 and LB34.

LB308 consists of two bills amended into one. The original was the repeal of the alternative minimum tax. Nebraska was only one of about eight states that still had an alternative minimum tax in place. The other part of the legislation dealt with loss carry-forward. It now conforms to the federal law of allowing 20 years to spread operating losses. Previously, Nebraska was set at a five-year limit.

LB104 deals with renewable energy. The legislation promises more wind energy and extends tax refunds for large investments in renewable energy.

LB476 is the Nebraska Internship Program. The bill improves flexibility for businesses, educational institutions and students. It was created in 2011 and has since approved nearly 1,000 internships, filled approximately 500 positions and approved 360 projects at 303 different companies. The average internship wage was $13 per hour.

LB34 is the Nebraska Advantage Revisions. It refines the Nebraska Advantage Act, the state’s most important economic development tool, by clarifying definitions and making pro-business changes.

Two bills were not passed—LB405 and LB406. These legislations would have eliminated all income taxes, both corporate and individual, and would have added $2.4 billion in new sales taxes.

“The death is always in the details, and the details of this were pretty dramatic,” Kennedy explained. “To do that, our sales tax would have to be applied to a wide range of items that are not susceptible to a sales tax now, the biggest of those being for manufacturing inputs, ag inputs, things like hospital rooms, dormitory rooms, just about everything. What came out of this, though, was a tax modernization committee.”

At the fall forum, the State Chamber always includes a measuring stick section to show how Nebraska compares to other states in key economic areas.

Nebraska is in very good shape right now. The state places fourth on CNBC’s Best States for Business Study. The study is based on 51 various areas of competitiveness.

“What is driving Nebraska’s high ranking is our business friendliness, our current economy, our quality of life and our low cost of living,” Vice President, Jamie Karl said. “What’s hurting us, maybe keeping us out of the elite three is our access to capital for businesses and our technology and innovation.”

According to CNBC, the nation’s economic hub is moving to the center of the nation.

In the Pollina Top 10 States for Business ranking, Nebraska places second. When narrowed down to just taxes, the state does not fare very well. In the Business Tax Climate study conducted by the Tax Foundation, Nebraska sits at 31.

The high rate of the individual income tax in Nebraska is currently at 6.84 percent starting at $27,000 per year. This percentage lands Nebraska in the number 35 spot in the country. The top rate of corporate taxes is 7.81 percent at $100,000 and above, earning the state the ranking of 32. State and local sales taxes combined are at 6.79 percent; awarding Nebraska the dead center, number 25 placement.

“If we’re shooting for average, we’re there,” Karl said.

Since January of 2006, the Nebraska Advantage has led to private-sector commitments of nearly 27,000 new jobs and over $10.3 billion in investments.

Breaking down the 2012 taxes, the total paid in Nebraska was $8.4 billion, 52 percent paid by individuals and 48 percent by businesses.

Further breaking down business taxes, 40 percent of the $4 billion paid were from property taxes. Other large figures were 22.9 percent from sales taxes and 10.5 percent from excise taxes.

Last fiscal year, Nebraska’s budgeted spending totals $7.3 billion—80 percent went to four state entities; health and human services, education, roads and the University of Nebraska. The total state spending has escalated 62 percent over the last 12 years. Since 2008, spending has remained fairly steady. Increases have arisen due to federal spending.