Nebraska neither high-tax, nor low-tax state

Nebraska's taxes and tax rates are a lot like our geography -- right in the middle.

According to the latest U.S. Census Bureau data, released in 2012, Nebraska ranks 26th in terms of combined local and state taxes as a share of personal income. By the same measure, our state's personal income taxes rank 29th, sales taxes rank 26th and property taxes rank 15th.

In other words, Nebraska is neither a high-tax, nor a low-tax state.

The vast majority of Nebraska's tax revenue goes to support services that are important to families and businesses, such as education, roads, public safety, and health care for low-income children, senior citizens, and Nebraskans with disabilities. In fact, 83 percent of the state's mainline budget goes toward education and health and human services alone.

Research shows that investments that build a highly-educated workforce and good transportation networks that help get products to market are more important to businesses than taxes. Businesses also want good public schools for their workers' children to attend and strong law enforcement agencies that help create safe and stable communities.

Taxes make all of these bedrocks of a strong economy possible, particularly in Nebraska where we lack other significant revenue streams like tourism or natural resources.

Nebraska's tax structure and investments in key areas have allowed the state to score very well in several business and economic indicator rankings. CNBC ranked Nebraska No. 5 in 2015 in terms of business friendly states. In 2014, Nebraska ranked third in Pollina's list of best pro-business states, Gallup gave Nebraska the third-highest well-being index score, and Forbes ranked Nebraska No. 2 in terms of economic climate. Fortune Magazine also recently listed Lincoln and Omaha as the two best cities in the country to find a job.

Nebraska fares well in several tax rankings, too. In 2012, the U.S. Chamber of Commerce ranked Nebraska No. 1 in terms of tax environments for new firms and No. 6 for best environment for overall taxes and regulation. The Tax Foundation in 2012 ranked Nebraska No. 1 for the lowest business tax cost for new business.

Investments in the foundational elements of a strong economy have served our state well, as we have one of the lowest unemployment rates in the country and we weathered the last recession in much better shape than most states, including nearly all of the so-called "low-tax" states.

That is not to say there isn't room for improvement in Nebraska's tax code, particularly when it comes to property taxes. Census data indicate that property taxes as a share of personal income are relatively high compared to our other taxes, and Nebraska residents made it clear during the 2013 Tax Modernization Committee study that property taxes were their biggest concern.

Many lawmakers have noted that the crux of Nebraska's property tax challenge is our state's high reliance on property taxes to fund K-12 education, which has been mentioned in every major study of our state's tax code since 1962. Nebraska is ranked 2nd in the country for highest reliance on local sources of revenue -- primarily property taxes -- to fund K-12 education. This heavy reliance on property taxes to fund our public education system is driven by relatively low levels of state support for schools. We rank 49th in the country in this regard.

Nebraska can take steps to help address our property tax and school funding challenges but to do so effectively, it's important to have an accurate picture of our current tax structure.

The data show Nebraska is neither a high-tax nor a low-tax state and working from that understanding can help our leaders make changes to our tax code that will benefit our state, our children and our economy for years to come.

-- Renee Fry is executive director of the OpenSky Policy Institute