Sen. Tony Vargas of Omaha on Friday told the Legislature's Revenue Committee that his proposal to increase state income taxes for the highest-income Nebraskans would in turn reduce taxes for low-income and middle-income families while providing additional revenue for the state.
"It's important to provide some financial relief for low-income families," Vargas said during a hearing on the measure.
His bill (LB1074) would change the taxable income range of Nebraska's four existing individual income tax brackets.
The proposal would add a new tax bracket for married couples earning $200,000 or more and single taxpayers earning $100,000 or more in taxable income, and they would pay at a 7.84 percent rate.
An additional 1 percent rate would be applied to taxable income in excess of $1 million, while an additional 2 percent rate would be applied to taxable income of more than $2 million.
People are also reading…
The bill would raise an estimated $106 million in additional revenue during the first year, according to a fiscal analysis.
While providing tax reductions for lower-income Nebraskans, the measure would supply the state with additional revenue at a time when it is facing a third round of budget cuts that will target "programs that Nebraskans rely on," Vargas said.
Vargas, a member of the Appropriations Committee, said children, seniors, the University of Nebraska and state colleges all will be impacted by looming budget reductions this legislative session.
"This is a means to raise some revenue and provide some tax relief for low-income workers and their families," Vargas said.
In outlining his proposal, Vargas noted that he represents some of the lowest-income Nebraskans and some of the highest earners in the state in representing a legislative district that includes a large swath of south Omaha along with downtown Omaha.
"I'm looking for a fair way to sustain revenue and target relief," he said.
The measure drew opposition from business-oriented groups.
Nicole Fox, speaking for the Platte Institute, said "a millionaire's tax is poor policy" because it drives wealth away from a state.
Ron Sedlacek, vice president and general counsel for the Nebraska Chamber of Commerce and Industry, said Nebraska does not enjoy "a competitive tax system" even now.
The Chamber supports pending tax-reduction legislation, he said.
Tiffany Joekel, policy director for Open Sky Policy Institute, supported the bill, noting that it not only "reduces income taxes for low- and moderate-income Nebraskans," but it also raises revenue at a time when it is needed.Â