Tax change affects refund, payment
By Lisa Richardson
Staff Reporter
Many Nebraskans this year will
owe more state income tax than was
withheld from their paychecks, while
others will pocket unexpected refunds
because of changed tax laws.
The Nebraska Legislature in 1987
made major changes in state tax laws,
but continued to withhold state in
come taxes under the previous state
tax system.
Under the previous system, 19
percent of expected federal tax liabil
ity was withheld from workers’ pay
checks. Nebraska withheld under this
system in January and February 1987.
In March, the Legislature enacted a
law that increased Nebraska’s with
holding rate to 21 percent of federal
tax liability. This increase came as a
first response to the expected cuts in
federal income tax, said Jim Garver of
the policy division of the Nebraska
Department of Revenue.
The law required the State Tax
Commissioner to withhold at 21 per
11 UN i Sll III i MM 1
‘We should raise a
big stink about
this. We should
annoy our sena
tors as much as
we can until they
come to their
senses.’
—Goddard
Wtm
cent of federal liability until Jan. 1,
1988.
Later in 1987, the Legislature
passed LB773, which changed tax
laws so stale income tax was no longer
based on federal income tax liability.
The Legislature did not adjust the
withholding system to match the new
tax system.
Even if the withholding method
had changed, Garver said, there
wasn’t time to design and test a new
withholding system.
Sen. Vard Johnson of Omaha said
senators on the Revenue Committee
intended LB773 to increase
Nebraska’s income tax base by $10
million, from $360 million to $370
million.
Johnson, chairman of the commit
tee, said he thinks the average Nebras
kan will pay 7 to 8 percent more state
income tax than under the old system.
Under LB773, state income tax
will be based on an individual’s ad
justed gross income. Four tax brack
ets, ranging from 2 percent to 5.9
percent, will be used to calculate the
tax.
Since many people will pay less
federal tax this year, retaining the old
method would have reduced the
amount of tax the state could collect.
A separate measure passed last
year will eliminate state income taxes
for the approximately 30,000 Nebras
kans who will not owe any federal
income tax, Garver said.
Garver said Nebraska’s 1987 with
holding system was inadequate for
many reasons.
A study done by Syracuse Univer
sity last year recommended that Ne
braska withhold at least 21.6 percent
of federal liability to keep its tax base
stable, he said.
Nebraska’s average withholding
rate for 1987 was 20.7 percent of
federal liability, Garver said.
“There will be a measure of under
withholding based on that alone,” he
said.
Changes in federal taxes com
pounded the state withholding prob
lem. Trouble with the new W-4 forms,
Garver said, has made it uncertain
whether federal tax was underwith
held or overwithheld.
Also, most federal tax credits are
not recognized by Nebraska’s new
system, so people who used certain
federal withholding allowances
probably will owe more slate taxes
than were withheld. Garver said the
allowance for child care tax credits
was an example.
There is at least one victim of
underwithholding at the University of
Nebraska-Lincoln. Bart Goddard, a
graduate student in the math depart
ment, said his 1987 federal income tax
is $480. His state income tax is $402,
more than twice the $140 that had
been withheld. “That’s a far cry from
21 percent,” he said.
Goddard is married with two chil
dren. He said his family’s income is
average. He said he called the Tax
payer Assistance Office at the Ne
braska Department of Revenue and
was told that many people’s 1987 state
income taxes had been underwith
held.
Goddard said he thought it was
unfair to expect people to suddenly
pay large amounts of money because
of underwithholding.
“We should raise a big stink about
this,” he said. “We should annoy our
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senators as much as we can until they
come to their senses.”
Johnson said that although he ex
pected the average Nebraskan’s tax
bill to go up, he was surprised that
anyone would show a 100 percent
increase. He said that was not the
Legislature’s intention.
Garver said he thinks Goddard’s
case is unusual.
Both overwithholding and under
withholding have occurred, he said.
With so many complicating factors,
it’s hard to make any generalizations
about withholding problems, he said.
1986 state income taxes will not be
a good indicator of what most people
will pay, Garver said. However, the
majority will pay about 5 percent
more or less than they did last year,
according to Department of Revenue
projections, he said.
Garver said a more accurate system
of state income tax withholding, simi
lar to the present federal system, will
be used in 1988. Employers were
notified of the change Oct. 15.
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Chambers’ bill seeks
pay for UNL athletes
By Mary Nell Westbrook
Senior Reporter
University of Nebraska-Lin
coln student-athletes would be
treated as employees of the univer
sity under a bill introduced Thurs
day.
LB1226, proposed by Sen.
Ernie Chambers of Omaha, would
give all football players many of
the same benefits as university
employees.
Thursday was the last day to
submit new legislation. Fifty-two
bills were introduced Thursday,
bringing the total this session to
454.
Chambers suggested that play
ers get $1,000 a month for 12
months. The players need some
kind of compensation for all the
benefits, grants and salaries the
university receives from the foot
ball program, he said.
This bill does not only apply to,
but concentrates on, football play
ers, Chambers said.
Athletes are not treated as other
students because of their year
round obligation. ‘They’re under a
contract of indenture,” he said.
Chambers compared college
football to minor-league teams and
said the athletes should get some
kind of compensation. Nebraska
football coach Tom Osborne also
has supported compensation for
college athletes.
The NCAA would probably put
UNL’s team on suspension if the
bill ever passed because it violates
rules against being paid as a profes
sional.
But Chambers said he wonders
why the NCAA would want to
“keep indentured servitude.”
The bill slates that the NCAA
itself is evidence of the problems
with ruling against compensation.
The rules are “unreasonable, pro
mote unfairness, encourage dis
honesty in recruiting and retaining
players and come perilously near
to violating the 13th Amendment,”
the bill states.
Chambers has rallied for this
cause since the late 1960s, he said,
but the only way he’ll get it to pass
is if more senators side with his
ideas.
“But they’re afraid they would
lose their season tickets,” Cham
bers said.
Student falls prey to scheme
WORK from Page 1
said. “I’m laughing at myself because
it’s the most stupid thing I’ve ever
done.”
Although E.D. Gebhardt, president
of Global Communications Inc.,
could not be reached by phone, his
secretary said Gebhardt declined to
comment on any allegations at this
time.
The postal service is preparing a
deal with Global Communications
Inc. where it would not press criminal
charges if the company stops its op
eration. Schneringer said most opera
tors of work-at-home schemes are so
small that the postal service is able to
shut them down without any criminal
proceedings.
It may be a worn-out phrase, but
Schneringer said the best advice he
has is: “Ini sounds too good lobe true,
than it probably is."
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