The state of Nebraska already has a regressive tax code that asks lower-income families to pay more than the state’s wealthiest residents. According to the Institute of Taxation and Economic Policy, the poorest 20 percent of Nebraskans pay an average of 11.1 percent of their annual income in state and local taxes, while the richest 1 percent pay just 6.1 percent of theirs, thanks to the state’s heavy reliance on regressive property taxes.
Gov. Dave Heinemen (R), however, seems to believe that the poor aren’t doing their part in his state. Despite saying his “highest priority” was “tax relief for Nebraska’s hard-working, middle class taxpayer,” Heinemen used his State of the State speech to unveil a tax proposal that would do next to nothing to help Nebraska’s poorest residents while providing sizable tax breaks to the rich, Citizens for Tax Justice found:
In his recent State of the State speech, Nebraska Governor Dave Heineman unveiled his three-pronged tax reduction proposal: income tax rate reductions and broadening of income tax brackets, a reduction in the corporate income tax rate, and complete elimination of the inheritance tax. [...]
Nebraska’s tax structure is already regressive and asks more of lower income families than better off families…The Governor’s proposal does nothing to reduce property taxes, does little to assist the lowest income Nebraskans, and would actually make this disparity worse.
As CTJ notes, Heinemen’s proposal wouldn’t replace the $40 million generated by the inheritance tax, just a year after his last budget eliminated state aid to local governments. In Omaha, the county board passed a resolution opposing Heinemen’s plan because it would “force” them to raise property taxes, thereby increasing the tax burden on lower- and middle-class Nebraskans.
Reducing the income tax rate, meanwhile, would have a similar effect, forcing the state to rely even more heavily on regressive property taxes instead of the more progressive income tax structure.