Nebraska Gov Pete Ricketts pitched his proposed 100% tax exemption for military retirees to a legislative committee on Friday.
It’s estimated to cost about $13 million a year, which supporters say would be offset by taxes and other economic benefits from retirees remaining to live and work in Nebraska.
The measure would expand Nebraska’s current, 50% tax exemption on military retiree pay that was passed last year. Both bills were introduced by Sen Tom Brewer of Gordon, a highly-decorated veteran, who sees taxation of military benefits as a workforce development issue.
Brewer told the committee many military retirees from Offutt AFB near Omaha who have highly specialized skills and security clearances are leaving Nebraska and taking high-paying civilian jobs in states that don’t tax their retirement benefits.
Gov Ricketts said the 100% exemption would help Nebraska compete for those veterans.
Asked if granting such an exemption to them would open the way for similar requests from other retirement groups such as law enforcement, Ricketts said their career experiences make military retirees unique.
Ricketts said the number of military retirees in Iowa and South Dakota is growing 2 to 3 times faster than the civilian population, while in Nebraska, it’s growing half as fast.
The only opposition at Friday’s hearing was a letter from the Open Sky Policy Institute that called the proposal well-intentioned, but that exemptions were hurting the state’s general fund and this one could benefit high-income individuals.
The letter also said academic research does not show a connection between tax rates and people’s decisions on where to live.