Think tank suggests broader sales tax to protect Nebraska income cuts

Summarised from 2 outlets · Updated 5 Nov, 23:50 · Archive

A nonpartisan think tank report proposes taxing services to shore up Nebraska's budget as income tax cuts erode revenue.

A nonpartisan think tank report outlines how Nebraska could broaden its sales tax to services including hair care, medical care and motor fuel, in an effort to bolster declining sales tax revenue. The Platte Institute estimates taxing services could generate more than £1.6 billion by 2028, offering what it describes as a 'menu of options' to state lawmakers.

The proposal comes as current projections put next year's state budget deficit near £1.2 billion. This follows Governor Jim Pillen's 2023 income tax cut legislation, which he championed as the largest tax cut package in state history. The cuts reduce income taxes from nearly 7 per cent to just under 4 per cent by January 2027.

Nebraska currently taxes some goods but not their service equivalents. The state taxes lawnmowers but not lawn care, for example, and washing machines but not laundromats. Platte Institute CEO Jim Vokal attributed these inconsistencies to lobbying rather than sound policy, noting the state's sales tax structure dates from 60 years ago when Nebraska had a different economy.

Vokal said a broader sales tax base would protect the planned income tax cuts, prevent future tax increases and allow property tax relief. Nebraska's 49 senators may need to decide whether to expand the sales tax base.

How it is being reported

• Could a broader sales tax protect Nebraska’s income tax cuts? Think tank report gives lawmakers a ‘menu of options’A nonpartisan think tank report outlines how Nebraska could end sales tax exemptions to services such as hair care, medical care and motor fuel, in an effort to bolster the state’s eroding sales tax revenue base.1011Now · 5 Nov, 23:34
• Could a broader sales tax protect Nebraska’s income tax cuts? Think tank report gives lawmakers a ‘menu of options’A nonpartisan think tank report outlines how Nebraska could end sales tax exemptions to services such as hair care, medical care and motor fuel, in an effort to bolster the state’s eroding sales tax revenue base.WOWT · 5 Nov, 23:34

In this story: Nebraska · Platte Institute · Jim Pillen · Jim Vokal · Lincoln

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