LINCOLN — State lawmakers fell two votes short Monday night of killing a proposal to reduce corporate income taxes.
The Legislature’s Revenue Committee, as part of a bill that combined several income tax proposals, is seeking to reduce the state’s top income tax rate for corporations from 7.81% to 6.84%.
A prime supporter of the idea, State Sen. Lou Ann Linehan of Elkhorn, said the main goal was to create “parity” between the rate paid by the state’s largest companies and the rate paid by smaller businesses and entrepreneurs, who pay their taxes as individual income.
The proposal, which would grow to a $42 million tax break after four years, quickly ran into opposition from senators. They argued that cutting property taxes was a higher priority than a corporate tax break and that a reduction would do little to help the economy.
Sen. Curt Friesen of Henderson, who has introduced several bills related to property taxes, said any corporation with a decent accountant isn’t paying the top rate. Sen. Megan Hunt of Omaha said that corporate tax cuts don’t inspire new job creation and that 83% of any cut would go to companies headquartered outside the state.
Friesen said any decision on cutting corporate taxes needs to wait until next year, when the Revenue Committee has pledged to consider comprehensive reform of the state’s property, income and sales taxes.
Linehan and other supporters argued that Nebraska doesn’t compete with neighboring states, which have lower corporate tax rates or don’t tax corporations at all. She said her proposal sends an important message to businesses.
Friesen proposed an amendment to remove the corporate tax cut from Legislative Bill 432, but it fell two votes short, on a 23-23 vote.
Still, first-round advancement of LB 432, which combined several priorities of the Revenue Committee into a “Christmas tree bill,” stalled Monday night. Objections to other proposals in the bill led to the delay, but legislators are expected to resume considering it.