My Side of the Fencepost

Replace inheritance tax revenues

By Jim Dickerson

Gov. Dave Heineman presented his “State of the State” speech last week, calling for $327 million in tax relief over the next three years.

I don’t know if the state budget, which was operating in the red when the Legislature convened just last year, can afford quite that much tax relief — but we shall see.

The governor wants to reduce tax rates and expand the brackets for individual income taxpayers, lower the corporate tax rates, and repeal the inheritance tax.


The last part of this proposal is the “kicker” for many counties across Nebraska that depend on monies from the inheritance tax fund to help finance road programs and other portions of the budget.

In these days of record land prices, inheritance tax funds have been growing for many counties, and those funds are being tapped.

Boone County is also using inheritance tax funds.

In approving their 2011-12 budget last September, the Boone County Commissioners used $350,000 in transfers from the inheritance tax fund for roads, and $100,000 from inheritance tax to help repay the bonds for courthouse remodeling project.

According to the County Treasurer’s Semi-Annual Statement (which appears in this week’s Albion News as a public notice), Boone County’s inheritance tax currently has a balance of more than $1.3 million. Receipts so far this year have totaled nearly $149,000. A total of $350,000 has been transferred out of the inheritance tax fund so far this year.

Similar use of inheritance tax money can be found in counties across the state.

From the point of view of counties, inheritance tax has provided an alternative to property taxes in funding various improvements. It allows flexibility and helps make some projects possible that might not be otherwise.

Many counties, I’m sure, have made year-to-year commitments for inheritance tax funds, as Boone County has for its courthouse bond fund.

On the other hand, I’m sure that heirs of estates would appreciate not having to fork over proceeds from those estates that they feel have been taxed already.

As Gov. Heineman stated, Nebraska is one of only eight states that still have inheritance tax. Eliminating that tax, he said, would be the last step in doing away entirely with the “death tax.”


Officials in many counties, while not necessarily opposing elimination of inheritance tax, would certainly like to maintain a revenue source separate from property tax.

They can see the potential for a budget crunch if inheritance tax is eliminated. They don’t want to be forced to choose between a big tax increase or a reduction of services.


Alternative measures will certainly be proposed.

In fact, at least one member of the Hall County Board of Supervisors has already made a proposal for a small percentage of the state income tax to be given back to the counties on a population basis to help replace inheritance tax revenue.

Of course, that proposal would directly impact Gov. Heineman’s plans for income tax cuts — so it’s going to be an interesting debate.

I don’t particularly like the inheritance tax. I know I wouldn’t like the idea of actually paying it — but it is a substantial and important revenue source for counties in Nebraska.

If we are to eliminate this tax, then the governor and the Legislature need to find a more reasonable revenue solution than simply increasing property taxes.

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