While optimism is growing in Nebraska and nationally as vaccinations increase and COVID-19 case counts decline, the fact is the pandemic has caused and continues to cause unprecedented devastation for many.
National and state-level polling and data reflect this reality and show that the pandemic has been particularly harmful to those who identify as Black, Indigenous and People of Color. A member survey by the Nonprofit Association of the Midlands, for example, shows Nebraska nonprofits are seeing skyrocketing numbers of people facing hunger, mental health issues, child care challenges, homelessness, poverty and domestic violence.
The NAM survey showed that, from 2019 to 2020, the number of people served by one nonprofit, Catholic Charities of Omaha, nearly doubled, going from 80,000 to 156,000 Nebraskans across 23 counties. The volume of food provided by its pantries grew even more, ballooning from 200,000 pounds in 2019 to 1.4 million pounds in 2020.
But polling also shows that for others, including some of the wealthiest among us, the pandemic has been very profitable. Amazon CEO Jeff Bezos, for example, saw his net worth increase by $58 billion from March 2020 to March 2021, according to the Washington Post.
Billionaires like Bezos stand to benefit further as a result of LB 432, a bill on track to pass in the Nebraska Legislature that would reduce taxes for corporations at a time when many continue to struggle financially.
The Legislature is on track to pass bills that would improve food insecurity and child care but these measures will expire once the federal funds for these programs dry up in a couple of years. In contrast, LB 432’s tax cuts for Bezos and other wealthy out-of-state corporations and shareholders would be permanent. At a time when the Legislature has general fund dollars to help Nebraskans who need it, it is perplexing that lawmakers would prioritize tax cuts for wealthy corporations, many of which, like Amazon, don’t even have a presence in the state.
Will LB 432 benefit some Nebraska companies? Sure, but not very many. By definition, to benefit from the tax cuts proposed in LB 432, a company must be a C Corporation and have over $100,000 in taxable income. And the more taxable income they have, the more they would benefit from the corporate tax cuts proposed in LB 432. Furthermore, lawmakers just last session passed a massive tax-incentive package that largely benefits these same companies.
And while most of LB 432’s corporate tax cuts are likely to be enjoyed by people who live elsewhere, Nebraska is unlikely to experience much in the way of economic growth because of the bill. Both the Congressional Budget Office (CBO) and Mark Zandi, co-founder of Moody’s Analytics, have found that corporate tax cuts aren’t an effective way to stimulate the economy, with the CBO writing that “increasing the after-tax income of businesses typically does not create much incentive for them to hire more workers in order to produce more, because production depends principally on their ability to sell their products.”
The revenue losses created by corporate tax cuts would, however, deplete funds that could be used to support real economy builders like good K-12 schools and roads, or help provide Nebraskans with housing, food, or mental health services.
Finally, LB 432 and other tax-cut measures being debated by lawmakers this session could, if passed, result in a commensurate reduction of federal relief dollars, per a stipulation in the American Recovery Plan. This means less federal funding to help Nebraskans in crisis, and fewer dollars to make transformational change to help us better weather the next challenge.
Lawmakers are in a position to help ensure Nebraskans get the support they need to recover from the COVID-19 pandemic and make sure the state is on solid fiscal footing the next time the economy dips. This should take priority over LB 432’s corporate tax cuts.
Renee Fry is executive director of the Open Sky Policy Institute, a think tank focusing on Nebraska state government issues.