Tax cuts. Who should get them and how, really depends on the ideology of the senator.

$160 is the average amount homeowners who live in the house they own, could keep in their pocket.

It's a property tax break one senator says some need more than others.

Senator Heath Mello wants to give the middle class a tax cut.

Sen. Mello tells 10/11, "It's a new Homestead exemption that essentially provides $8,000 that's taken off the valuation of your home."

The $150 to $160 is based on the average $115,000 home.

The Omaha senator says it's a direct alternative to Governor Dave Heineman's bill which he asked Senator Abbie Cornett to introduce on his behalf. The governor's $327 million dollar tax cut also targets the middle class and would get rid of the inheritance tax, lower individual and corporate taxes and expand the income brackets.

But Senator Mello says it doesn't do enough for the middle class, "Under the Governor's proposal the wealthiest Nebraskans receive more back than the bottom 60% of Nebraskans."

Senator Abbie Cornett is Chairperson of the Legislature's Revenue Committee. During the hearing on Wednesday she asked Senator Mello, "How does this affect people who don't own their own home, rent, or better yet why didn't just considering putting in the property tax credit so you'd get ag land relief."

Mello responded, "This is a targeted tax cut, it will not impact 100% of Nebraska taxpayers because it's not an income tax.

Senator Cornett then presented a scenario to see if this could even work.

She says, "All the sudden the city wants to finance something, what do they do? They raise property taxes! Most of the metropolitan area has at least 50% to go up on their property tax."

But before anything happens one major decision has to be made.

Senator Mello wonders, "Can we actually fiscally afford it? Because we have yet to see a budget for the next biennial budget."

He sits on the Legislature's Appropriations committee. He told the committee it's unprecedented to be discussing tax cuts in a deficit year. He says the only time he can remember this happening was five or six years ago.

Senator Greg Adams of York expressed similar concerns about whether Nebraska could afford tax breaks.

In addition to Senator Mello's bill, the Legislature's Revenue Committee also heard testimony Wednesday from three other lawmakers, several of whom said their tax relief idea should
rank as the top priority this session.

One measure by Elk Creek Sen. Lavon Heidemann would reduce the valuation of farm land for school district taxation by 2 percent
annually, over a 5-year period.

Senator Heidemann says this has been his top priority since he entered the Legislature and every year he's been trying to get this bill passed.

Another measure by Omaha Sen. Jeremy Nordquist would exempt
Social Security benefits from Nebraska state taxes. Nordquist told the committee Nebraska has the 3rd worst tax climate for retirees, only Vermont and Minnesota are worse.

He says hundreds of thousands of seniors in communities across Nebraska.

The fiscal note for Senator Nordquist's bill says it would go into effect in the fiscal year 2012-2013.

He says there are alternatives for a phase in. Nordquist says Iowa did a five year phase out of taxing social security benefits.

Senator John Wightman's bill provides an alternative to Governor Heineman's proposal to completely repeal the inheritance tax. The bill along with an amendment would keep close family at the 1% tax, but would change other classes.

Class two which includes aunts, uncles, nieces and nephews would reduce the tax from 13% to 10% and increase the taxable amount from $15,000 to $25,000.

Class three would decrease the tax from 18% to 15% and increase the taxable property from $10,000 to $15,000.

Senator Wightman introduced the amendment after talking with county government officials across the state. He says this would allow governments to keep funding that is essential to their operation while reducing the impact of the inheritance tax.

Senator Wightman says the Legislature should not repeal the inheritance tax.