Tax-cut bill omits single renters

LINCOLN - State senators gave second-round approval Thursday to a broad tax cut package that focuses on income and property tax cuts and will reduce state tax revenue by more than $400 million in the next two fiscal years.

Middle-income families that own a home would see several hundred dollars in property and income tax cuts. Single people who rent would see almost no change in their taxes under the plan, which senators said was a compromise.

Senators who preferred cutting the state's 5.5 percent sales tax held up the tax cut bill (LB367) for almost five hours Thursday, but were unable to get enough votes for a package that included a sales tax cut.

Just 15 senators supported a half-cent sales tax cut amendment. Senators voted to stop the filibuster on the tax cut bill and approve the package with cuts to income and sales tax and elimination of the estate tax.

But the debate may not be over. Omaha Sen. Ernie Chambers said he would filibuster other bills to force support for a sales tax cut. Chambers continued the filibuster into the late evening.

For the average homeowner, the property tax credit is not much money - about $85 a year on the $106,000 median home, said Sen. Mick Mines of Blair, one of those pushing for a sales tax cut.

“Ladies and gentlemen, that's about $7 a month. About the price of a hamburger, fries and a coke at Dinkers Bar in Omaha,” he said.

“You know who makes out like bandits? Folks that are wealthy, land wealthy, who have hundreds and hundreds of acres. That's where the property tax relief is coming,” he said.

Sales tax cut supporters also pointed to the promise made in 2002 when a previous Legislature raised the sales tax to 5.5 percent to help the state through an economic downturn. Senators at that time said that the sales tax would be returned to the 5-cent level when the economic tide turned, Omaha Sen. Tom White said.

White and others also noted that the sales tax benefits go to everyone and benefit the poor the most. “What's driving me is trying to make sure there is representation for the poor,” White said.

This is the second year in a row that the Legislature has cut taxes. Last year, the tax cut package cut income tax at all income levels and reduced the taxable value of ag land from 80 percent to 75 percent of market value.

Sen. Dave Pankonin of Louisville said senators should be thankful they can afford to give tax cuts.

“Not all states are able to do this. Many states are talking about tax increases,” he said.

“Now we have to choose between competing plans and ideas,” Pankonin said about the numerous tax cut plans that senators have considered. “All have some merit. I wish we could do more than we are talking about,” he said.

These tax cuts may not be permanent, senators warned.

The property tax credit, which will show up on property tax statements, will likely be temporary, available only during good economic times, several senators pointed out. The Legislature will likely have to drop the credit during the next downturn, they said.