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Editorial
Nebraska on right track; still room for improvement
Friday, January 17, 2014
The grass is always greener on the other side of the fence.
No, we're not talking about legalized marijuana, although Colorado does figure into today's discussion. Instead, we're talking about taxes.
We've all heard anecdotal evidence about the state of Nebraska's taxes being higher than that of adjoining states -- whether it comes to registering a car, buying gasoline or paying property taxes on our home.
And, yes, there are certainly many examples where that is the case.
But one has to look at the whole picture when it comes to taxes, and Nebraskans don't have it that bad, according to a study released this week by the OpenSky Policy Institute.
In fact, compared to nine similar states in the region, we're seventh lowest.
Wyoming and South Dakota aren't included in the mix, because they have no individual income taxes, income from the energy industry or other factors, but Colorado, Kansas and Iowa are, as are Wisconsin, Illinois, Ohio, Minnesota and Michigan.
Adding up sales and excise tax, property tax and personal income taxes, a Nebraska family earning the median family income of $63,442 would pay $5,710 in taxes. Wisconsin is highest, with $6,725, and only Kansas with $5,393, and Colorado with $4,822 are lower.
The OpenSky institute notes that's it's not easy to compare apples to oranges. While Nebraska's top personal income tax rate is higher than five of the comparble states, but deductions, credits, local income taxes mean that a middle-income family in Nebraska pays less in state and local income taxes than other states except Kansas.
Nebraska's 5.5 percent state sales tax is lower than all but two of the other states, but we pay more in overall sales taxes than we would pay in the other states except, again, Kansas. Nebraska has fewer exemptions and higher local sales taxes than some of the other states.
Likewise, a flat income tax doesn't seem to be a magic bullet; states with that feature range from No. 2 Illinois to No. 6 Michigan and No. 9 Colorado.
Overall, there's only $238 difference between the highest tax rate in Wisconsin and the lowest in Colorado.
Being average, of course, isn't necessarily something to be proud of, only that we're not that much better or worse than other states in our position.
We'd much rather have a big advantage when it comes to attracting jobs and residents to the Cornhusker state. Infrastructure and services that those taxes provide, however, are just as important when it comes to making Nebraska grow.
The OpenSky report, however, should serve as encouragement that while we're basically on the right track there are plenty of opportunities to improve our position.