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Nebraska’s High Income Taxes

While Nebraska has a relatively low cost-of-living and low unemployment, too many people are having a hard time finding the good life here. Out-migration from Nebraska is a significant challenge to the state’s economic growth.The state’s high income taxes are one of the major barriers to creating better opportunities in the state. In addition to paying the nation’s 15th highest top personal income tax rate, which directly impacts middle-income Nebraskans, the personal income taxes collected from paychecks in Nebraska rank 18th highest per capita in the country.While we all have to pay some taxes if we want government services, taxes are just prices like those we pay for any other item we buy. All states have basic services, but not all spend as much as Nebraska. When the price gets too high, people look for alternatives. IRS data show that since 1992, $3 billion in Adjusted Gross Income, and the people who create that income, have left Nebraska.

Many of us know the stories of these Nebraskans. Young people are often unable to find high-paying jobs in Nebraska, forcing them to settle for opportunities elsewhere, away from their families and their childhood homes. Seniors on a fixed income or other recipients of retirement income have to make their budgets stretch, and most states offer generous exemptions of their income from taxes, while many others levy no income tax at all. And the dream of starting a new small business and growing it to success is even more difficult for entrepreneurs facing a high tax burden.

Nationally, Nebraska falls below the national average in the creation of new jobs, and Nebraska’s state and local taxes place it at a mediocre 27th on the Tax Foundation’s business tax climate index. A similar analysis published by the American Legislative Exchange Council places Nebraska at 32nd for state economic outlook.

Of course, having one of the highest income tax burdens in our region is bad for the economy as well as the tax base. No matter what the state income tax rate is, you can’t tax income that isn’t earned here. To keep families close to their Nebraska roots, lawmakers must enact policies that make it possible for them to stay, and that attract new workers and businesses, too.

There are numerous options for comprehensive tax reform that can lower Nebraska’s harmful tax burdens in a responsible way. Strong Roots Nebraska exists to provide these workable solutions for tax relief that remove barriers to growth and opportunity, and to empower Nebraskans to change the direction of tax policy in our state.

Sign our petition for tax relief today to join the movement!