Report Surveys Nebraskans on Property Taxes

NEWS RELEASE from the Platte Institute

Contact: Adam Weinberg
(402) 452-3737
aweinberg@platteinstitute.org

New Report: Get Real About Property Taxes

Are Nebraskans Willing to Make Changes to See Reforms?

OMAHA, NE – A new survey finds that Nebraskans might be willing to pay more sales taxes—if the Nebraska Legislature is able to do something major about their local property tax bills. The results are one part of a new report on property tax reform by the Platte Institute: “Get Real About Property Taxes,” by Sarah Curry and Adam Weinberg. The new report is now online at PlatteInstitute.org/Policy. The most recent PDF copy of the report may be found at this link.

A news conference call to discuss the report will be held on Tuesday, October 30 at 10:30 a.m. Central Time. To call in, dial (605) 475-4000, Access Code: 106202#. The call may be recorded for broadcast and will include Q&A.

In the report, over 300 Nebraskans provide their views on property taxes and potential alternatives for funding local government services. Sixty-one percent of respondents said they would be willing to pay more in other taxes in exchange for reforms to the property tax, with 55 percent saying they would prefer to pay more sales tax instead. No other tax type received majority support.

However, the report notes that taxpayers could have second thoughts, since the shift to sales tax would mean paying more on consumer goods and services that are currently tax-free. There are 117 sales tax exemptions in Nebraska right now. Services that are exempt include haircuts, dry cleaning, veterinary care, and labor on some motor vehicle repairs. Exempt goods include gasoline, newspapers, and most food bought at the grocery store.   

Charts and graphics from the report, including survey responses and tables comparing which sales are taxed in Nebraska and other states, can be found at this link. Platte Institute logos and author photos are also included.

Forty-six percent of survey respondents said they’d be willing to pay sales tax on personal care services like haircuts, 44 percent agreed to sales taxes on transportation including taxis, limousines, and ridesharing, and 38 percent favored collecting sales tax on household repair services. But none of the survey’s nine proposed options for ending exemptions earned majority support. This reluctance makes addressing property taxes even harder for lawmakers, since a 30 percent reduction in property taxes could cost the state over $1 billion every year.

“There are very few palatable choices left on the table if state senators want to collect enough new, stable revenue to pay for significant and immediate property tax reforms,” said Sarah Curry, Policy Director at the Platte Institute.

“And what over 160 years of property tax history in Nebraska shows us is that even if the state finds new ways to pay for government, without the right limits on property taxes going forward, the problem could still get worse,” said Curry.

Here are other highlights from the report:

• After adjusting for inflation, Nebraskans pay more property taxes per capita than at any time in the state’s history, more than $2,100 per person.
• Survey respondents hoped for significant property tax reductions, with most saying they would be satisfied if the Legislature could cut their property tax bills by 20 or 30 percent. That amount of tax reduction would likely cost the state more than $1 billion a year.
• Changes in property tax policy over the last 50 years have rarely slowed the growth of property taxes for long. The repeal of the state property tax in 1967 was followed by an increase in property tax assessments from 35 percent of market value to 100 percent in 1981. Changes to the state education funding formula in the 1990s and property tax relief programs in the 2000s did not result in a permanent reduction in property taxes.
• Nebraska’s sales tax base has narrowed as the state has increasingly become a service-based economy. Sales of most consumer goods sold in Nebraska are taxed, but most services are not. This is one reason the state sales tax has increased from 2.5 percent in 1967 to roughly 7 percent today, including local sales taxes.
• Sales taxes from online transactions won’t raise enough revenue on their own to fund significant property tax reform.
• Nebraska currently uses two primary methods to limit property taxes: a cap on local property tax rates, and limits on revenue and expenditures for property taxing subdivisions. However, even with the caps, average property tax rates in Nebraska are the seventh highest nationally, and a greater percentage of the market value of properties are subject to tax in Nebraska than in many states.
• A study by the Mercatus Center at George Mason University found that Nebraska could make a significant positive impact on its overall tax burden if it moved away from using tax incentives and instead initiated tax reforms. Mercatus found the revenue lost to incentives was enough to completely eliminate the state’s corporate income tax and still have money left over for additional tax cuts.

To schedule an interview with Sarah Curry or Adam Weinberg, please contact Adam Weinberg at (402) 452-3737 or email aweinberg@platteinstitute.org.

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The Platte Institute advances policies that remove barriers to growth and opportunity in Nebraska. For more media resources, please visit PlatteInstitute.org/Media.