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LINCOLN, Neb. (AP) â¿¿ Veterans' groups told lawmakers Thursday that Nebraska's tax on military retirement pay is driving people out of the state, while some lawmakers questioned whether the losses are influenced more by warmer climates and family connections elsewhere.
The Legislature's Revenue Committee heard testimony on four bills targeting retirement pay. Two measures would exempt military retirement pay from the state income tax, one would exempt military pensions and Social Security benefits, and one would eliminate taxes on all pensions.
The bills were introduced by Sens. Jim Smith and Bill Kintner of Papillion, Charlie Janssen of Fremont, and Bob Krist of Omaha. Lawmakers have pitched scores of tax-exemption proposals this year aimed at Social Security benefits, military pensions and other forms of retirement pay.
Nebraska Gov. Dave Heineman has introduced an even larger plan that would eliminate the state's income tax, while removing as much as $2.4 billion in sales tax exemptions from various businesses and organizations. A second, alternative proposal would get rid of Nebraska's corporate income tax and reduce the tax burden on retirees.
Dan Donovan, the head of a Nebraska veterans group, said the tax climate is a compelling reason for the exodus. Some lawmakers suggested that the weather and other factors played a larger role.
Chris Ferdico, a lawyer and spokesman for the Nebraska National Guard Officers Association, said retirees will start spending their nest eggs but might hesitate if they live in a state where they face higher taxes.
"How much they spend and how quickly they spend it is absolutely, directly related to how far they believe they can stretch their savings," Ferdico said. "They will only spend if they have the confidence that their savings, the current value of their dollar, is worth what they're going to need it to be worth."