LINCOLN — Nebraska's latest “tax cut spree” will result in the nation's steepest revenue declines and threaten state services, according to a Washington, D.C.-based think tank.
The report from Focusing on budget and policy priorities. The Lincoln-based Open Skies Policy Center cited recent tax cuts enacted by Nebraska lawmakers to reduce state revenue by $3.1 billion over the next five years, an increase in general fund revenue. This will result in a 7.6% decrease.
6th steepest hill in the country
This is the sixth-deepest state revenue cut in the nation, and the report, titled “States' recent tax cut spree creates significant risks for families and communities,” says this is primarily due to: This was made possible by an influx of federal aid through policies like these. COVID-19 (new coronavirus infection).
Open Skies Executive Director Rebecca Firestone said Nebraska's budget cuts threaten the state's ability to address the “real challenges” it faces and jeopardize current investments in schools, health care and public safety. said.
He called on the Legislature to focus on the future, not just current priorities, during the 2024 legislative session.
“We can ensure everyone pays their fair share and has the income to invest in great schools, stable and affordable housing, and quality child care,” Firestone said in a press release. Stated.
But the director of Omaha's free market think tank took a different view, saying the recent tax cuts reflected that Nebraska's taxes were too high.
“Nebraska has recently had a record amount of cash on hand, which means it is overtaxing its citizens,” said Jim Vocal of the Pratt Institute. The agency released a report earlier this week calling for further tax cuts.
“Prior to these income tax cuts, Nebraska was terribly uncompetitive within the region,” Vocal said. “The recent moves on taxes were desperately needed to remain competitive.”
One of 26 states with tax cuts
According to the Center on Budget and Policy Priorities, a nonpartisan Washington, D.C.-based organization that analyzes state budget and tax policies, Nebraska is one of the 26 states that has enacted individual and corporate tax cuts in the past three years. It was one of them.
The center said the tax cuts are “tilted” primarily toward the wealthy and corporations, and are largely a temporary relief created by the strong federal aid handed out in response to COVID-19 to prevent an economic downturn. He said it was based on a fiscal surplus.
Firestone said permanent tax cuts based on temporary budget surpluses are risky, and the decline in state revenue is expected to widen over time.
Over the past three legislative sessions, the state Legislature expanded state tax credits to offset property taxes and began a phase-in effort to lower the top personal income tax rate and corporate tax rate to 3.99%.
The income tax cut has so far reduced state revenue by only $77 million, but the impact is expected to grow to $1 billion in 2028 alone, according to OpenSky.
Other alternatives
The Budget Policy Center report said some states are refusing to invest budget surpluses or offer significant tax cuts.
Washington state, for example, has enacted a new tax on capital gains received by the wealthiest 0.2% of taxpayers, expected to generate $500 million a year in new revenue that will go toward improving child care and schools.
In Kansas, where deep budget cuts in the early 2010s triggered a fiscal crisis, lawmakers rejected a flat tax proposal that was estimated to reduce revenue by nearly $1.4 billion over three years.
“Hardworking Nebraskans who are the engine of our economy face real challenges, but policymakers are cutting the revenue needed to address these critical issues head-on.” Stone said.
Get the morning headlines delivered to your inbox
