Arguing that "it is crazy" to tax Nebraskans with incomes of $29,000 at the same rate that millionaires pay, Sen. Justin Wayne of Omaha proposed Friday to add a higher state tax bracket for Nebraskans earning $2.5 million or more a year.
Wayne presented his proposal (LB738) to the Legislature's Revenue Committee during a public hearing that attracted wide opposition from Nebraska's business community.
Entrepreneurs are "highly mobile," Ron Sedlacek, vice president of the Nebraska Chamber of Commerce and Industry, cautioned the committee.
Millionaire taxes considered by other states are "often ephemeral," he suggested, lasting only short-term after states view the consequences.
And, he said, the bill would impact some taxpayers who may have a single year with a significant income when they sell or adjust resources for retirement.
Sedlacek spoke for a wide range of business organizations, including the Greater Omaha Chamber of Commerce, the Lincoln Chamber of Commerce, the Nebraska Bankers Association and National Federation of Independent Business members in Nebraska.
Nebraska already is considered "a high-tax state," Sedlacek said.
John Hansen, president of the Nebraska Farmers Union, supported the bill, arguing that it would be more fair to set tax rates according to "ability to pay."
Dave Welsch, a farmer and president of the Milford school board, told the committee the state needs additional revenue for property tax relief and to replenish state government's cash reserve.
The top state income tax rate now is 6.84 percent.
Under Wayne's proposal, a new rate of 7.84 percent would apply to taxpayers making an income above $2.5 million.
"I think Warren Buffett would support it," Wayne said.
That would produce additional state revenue of $5.7 million in fiscal 2019-20, rising to $14 million in fiscal 2020-21, according to a legislative fiscal analysis.
In other action, the committee heard Sen. Machaela Cavanaugh's proposal (LB535) to prohibit any business from being eligible for tax incentives under the Nebraska Advantage Act if it discriminated in employment on the basis of race, color, religion, sex, disability, marital status, national origin, sexual orientation or gender identity.
The measure was supported by ACLU of Nebraska and attracted no opposition.
Cavanaugh, an Omaha senator, said both the Lincoln and Omaha Chambers support the bill.