Senator Hadley and Members of the Revenue Committee:
The Lincoln Independent Business Association supports LB 1097 because its tax cuts will ease the high tax burden on Nebraskans and Nebraska businesses, increase the competitiveness of Nebraska businesses in today’s mobile economy and grow our tax base.
Nebraska’s current tax code is ranked the 21st most burdensome in the country and is measurably more burdensome than each of the six states sharing borders with Nebraska. Nebraska lags behind these neighbor states in job growth ranking five out of seven for years 2010 through 2012.[i] According to Creighton economist Ernie Goss, Nebraska’s relatively high income taxes have played a significant role in slowing the state’s economic growth.[ii]
Nebraska must decrease its tax rate to stay competitive with neighbor states and to retain high and middle income earners. Today’s economy is more mobile than ever before. Many highly skilled workers can perform their jobs from anywhere in the country. This information is not simply theoretical. This week a Lincoln CPA, Bob Bryant, told us “as a CPA I can verify that the higher income professionals have opportunities to avoid Nebraska taxes by relocating to tax haven locations. In fact we continually consider the state income tax rate when preparing a business expansion, or a retirement plan. When someone can relocate to a tax free state and realize a tax savings in excess of $10,000 per year, Nebraska will continue to have an out migration of higher income taxpayers.”
Economic research cited by University of Nebraska Economists Dr. Thompson and Dr. Anderson finds that economic growth is faster in states with lower tax rates including lower income tax rates.[iii] The less money employers are paying in taxes the more they have free to invest in their business and into expanding their workforce. Thus, cuts in Nebraska’s income tax will grow the state’s economy and grow Nebraska’s tax base.
Therefore, LIBA supports LB 1097 because cutting Nebraska’s individual and corporate income tax rates will help Nebraska businesses stay competitive, will help retain our state’s most productive employees and will grow Nebraska’s tax base.
[i] Ernie Goss,; The Goss Institute for Economic Research; A Nebraska Tax System for the 21st Century: A Critique and Recommendations; p. 10
[ii] Ernie Goss,; The Goss Institute for Economic Research; A Nebraska Tax System for the 21st Century: A Critique and Recommendations; p. 7
[iii] Dr. Erick Thompson, Dr. John Anderson; A Tax Modernization Study for Nebraska; University of Nebraska Lincoln Bureau of Business Research; p.16