Gov. Heineman Testifies in Support of Income Tax Reform Legislation

Gov. Heineman Testifies in Support of Income Tax Reform Legislation

Gov. Dave Heineman testified before the members of the Legislature's Revenue Committee today on LB 331, the Governor's proposal for income tax relief, which also includes the repeal of Nebraska's estate and construction labor sales taxes.

"The fact that we are here discussing tax relief is good news for Nebraska taxpayers," Gov. Heineman said. "Clearly one of the themes of this legislative session will be tax relief. Today, I am asking you to support fundamental income tax reform so we can reshape our tax system for the future."

In his testimony, the Governor identified several components that should be part of any tax relief package, including: providing for a fair tax structure through fundamental reform of Nebraska's tax system, ensuring that changes help simplify the state's tax code and are also easy to administer, and resulting in a lower tax burden for Nebraskans and their families.

Gov. Heineman said, "We have an opportunity to pass one of the most substantial tax reform packages in the U.S. I am here today because I believe we can accomplish something extraordinary for the people of this state. LB 331 provides real and immediate income tax reform. Moving this bill forward would help create a brighter future for Nebraska's young people and middle-class families."

LB 331 condenses Nebraska's four-bracket structure into three brackets, widens the definition of the middle-class to reflect modern earnings, and lowers income tax rates, including a lower rate for earners in the top bracket that would be phased in over four years. The proposal calls for indexing the new tax brackets following the rate phase-in, beginning in 2011. The bill also eliminates the marriage penalty by adjusting income tax brackets and increasing the state standard deduction for married filers to match the federal standard deduction.

"We need to pursue this tax relief package because our current income tax system is outdated, outmoded and fundamentally flawed. It is time to help the working families who pay income taxes in our state, and we need to remember that many small business owners, who are among the largest job creators in our state, pay their business taxes through the income tax system."

Estimates compiled by the Nebraska Department of Revenue estimate that 96 percent of all taxpayers would see their income taxes reduced as a result of the reforms contained in LB 331.

http://www.gov.state.ne.us/news/2007_01/31_tax_reform.html