The state has hit the pause button on efforts to strip companies of tax incentives under a get-tough-on-China law Gov. Jim Pillen pushed to passage last year.
The move came in the wake of reporting by Flatwater Free Press that revealed the widespread impact of the governor’s proposed incentives ban, with the potential to harm giant homegrown companies like Valmont, Lindsay and Werner.
The new law had raised alarm within the state’s business community, as it undercuts the tax incentives programs that have been a lynchpin of Nebraska business recruitment efforts for decades.
One of the provisions of Pillen’s new anti-China law sought to bar state tax incentives to Chinese businesses. But the law’s expansive definition of a “foreign adversarial company” included any company with a subsidiary in China.
Flatwater identified more than 50 companies — employing thousands of Nebraskans — that such a ban would apply to, since these companies have established subsidiaries in China in order to do business there.
The Revenue Department had been sending letters to some companies attempting to use tax incentive credits indicating they might be ineligible to do so due to Chinese subsidiaries. Such a move would effectively strip the companies of credits they had earned before the new law took effect on Oct. 1.
Some tax attorneys have questioned the legality of that move, as incentives are subject to signed contracts between businesses and the state.
The new guidance on the department’s website indicates the state is relooking at that issue while it puts enforcement efforts on hold.
“At this time the Nebraska Department of Revenue is pausing enforcement of the foreign adversarial company incentive ban for programs with statutorily mandated agreements signed prior to October 1, 2025, for further analysis,” the guidance reads.
The new guidance was dated Feb. 12. That’s the same day Pillen gave Flatwater a statement indicating his administration was taking a new look at the law and the day after Flatwater had shared the findings of its investigation with the administration.
Despite the state’s move, only a new bill in the Legislature could alter the new law’s impact on the state’s ability to recruit new business to the state. Under current law, none of the hundreds of companies with Chinese subsidiaries are eligible for tax incentives in Nebraska.
Pillen’s statement suggested there will be follow-up legislation clarifying that the incentives ban should not apply to American companies with Chinese subsidiaries.
“In this instance, it will be to ensure that tax credits are not given to Chinese-owned companies and entities,” a Pillen spokesperson said.
2 Comments
Please continue your excellent work in covering the inner workings of the state of Nebraska.
The no bid contract for $2.5 million, the State Auditors report of over $1.2 billion dollars of tax incentives paid to what may be under performing or closed companies are just a few things that need to be looked at closely.
Great reporting!
It is also awesome having Henry Cordes now reporting for Flatwater. Henry is one of the area’s best investigative journalists. Huge loss for the OWH…huge score for Flatwater.