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New data reveals taxpayer migration creates high costs in Nebraska

Experts worry that other states have figured out how to fix it and Nebraska has not
New data released today highlights a disturbing trend in Nebraska.
Published: Jun. 23, 2022 at 7:41 PM CDT
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OMAHA, Neb. (WOWT) - New data released today highlights a disturbing trend in Nebraska.

High taxes are costing the state in terms of population and tax dollars. Experts worry that other states have figured out how to fix it and Nebraska has not.

The term sounds a bit confusing: taxpayer migration.

Here’s what it means, data from the IRS follows the movements of everyone who files a tax return. The tax year between 2019 and 2020 saw 800,000 Americans leaving one state for another, that’s the migration.

The problem is they aren’t coming to Nebraska.

In fact, Nebraska lost a net of 4,200 people and $500,000 in tax returns with them. While a state like Idaho gained 36,000 people and added $2 billion in tax returns.

“We’re seeing them flock to states with lower income taxes, but other taxes impact it too. We have the eight highest property taxes, high car taxes, we’re one of only five states with an inheritance tax and the list goes on and on,” said Jim Vokal with The Platte Institute.

”This will be historic,” said Bryan Sloan during a news conference in April at the State Capitol. That’s when Nebraska lawmakers along with the Omaha chamber, business leaders, and state lawmakers hailed the passing of the biggest tax relief package in state history.

“These tax cuts today will make us so much more competitive,” said David Brown said that day in the rotunda.

It phases in reductions in the individual and business tax rates over the next five years and phases out taxes on social security income by 2025 among other things. At the time, the Nebraska taxpayer watchdog group, Platte Institute, appreciated cutting rather than spending.

But it warned that it won’t be enough and pointed out the new data from the IRS as another huge wake-up call that Nebraska keeps falling behind and needs to modernize its tax policy.

“Nebraska is not well-positioned to welcome the hundreds of thousands of people from other states but we can control in Lincoln how we tax people in Nebraska,” said Vokal.

The Platte Institute pitched these ideas earlier this year to state lawmakers to make Nebraska more competitive with surrounding states but it didn’t make it out of committee: part of it includes no income tax for the first $50,000 for a single tax filer and no income tax for first $100,000 of a married couple it would also eliminate inheritance tax and lower-income tax across the board.

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