Lincoln Journal Star: Study: Gov’s plan to scrap inheritance tax will hurt counties
A new study by an independent think tank says Gov. Dave Heineman’s plan to eliminate the state inheritance tax will likely cause property taxes to rise.
The study, by the OpenSky Policy Institute, said eliminating the inheritance tax will force most counties to slash services, deplete reserves or raise property taxes.
“For many counties, raising property taxes will be a last resort, but still an unavoidable option,” said OpenSky Executive Director Renee Fry. “Until the elimination of the inheritance tax can be studied in the larger context of tax reform, the better choice for preserving Nebraska’s future is to keep the inheritance tax, a proven source of funds to meet important needs.”
If counties replaced all of the lost inheritance tax revenue with higher property taxes, the average tax rate would increase by 7 percent, according to the report, “Feeling the Squeeze.”
According to OpenSky, Lancaster County has already reduced spending 15 percent over the past two years. Inheritance tax revenue is equal to about seven percent of Lancaster County’s general fund budget.
Eight other states have an inheritance tax. Nebraska eliminated its estate tax, which is based on the value of an entire estate, four years ago.