As introduced: LB 406 eliminates certain sales and use tax exemptions; eliminates the income tax on corporations; eliminates the financial institutions franchise tax; exempts certain retirement income from the Nebraska income tax; eliminates the earned income tax credit; changes benefits and requirements regarding certain tax incentive programs; makes adjustments to the Tax Expenditure Report; amends certain definitions; harmonizes language; and provides operative dates.
Introducing Senator(s): McCoy
Committee Hearing Date: February 7, 2013
Current Status: Indefinitely Postponed
Estimated Fiscal Impact: The Department of Revenue indicates they will require additional staff due to an increase in administrative costs associated with new sales tax permit holders and changes to the tax incentive programs at a cost of $434,000 for FY 2013-14 and $544,000 for FY 2014-15. LB 406 will also require a one-time programming charge of $44,338 paid to the Office of the CIO to remove a line on the Form 1040N, as well as to the NebFile filing system in FY 2013-14.
The Department also estimates they will realize approximately $9,000 in annual cost savings due to reduced programming expenses associated with the corporate income tax program beginning in FY 2014-15. Beginning in FY2015-16 they will realize annual savings due to staff reductions as a result of reduced processing of corporation income tax returns of $184,000. Finally, due to the expiration of an audit contract with the Multistate Tax Commission, beginning in FY2015-16 the Department will realize an annual savings of $140,000.
Voices for Children’s Position: Oppose (see our testimony)