Blueprint Nebraska’s Report on the Economic and Fiscal Impact of Tax Modernization
The complete economic and fiscal impact report on the Blueprint Nebraska tax modernization plan by Regional Economic Models, Inc. is available in PDF format at this link. This page provides Blueprint Nebraska’s summary of that report.
Nebraska has an outdated tax system that features relatively high taxes and inefficient and unpredictable funding of essential government services. Moreover, the present tax structure looks to the past rather than the future, weakens Nebraska’s economic competitiveness, and diminishes the quality of life of its citizens.
Nebraskans agree with this sentiment and added their voice to this perspective in Blueprint Nebraska’s Community Survey. In fact, when asked what one thing we need to ensure Nebraska’s economic vitality, they ranked taxes among the top three issues affecting their lives.
Blueprint Nebraska’s Tax Modernization initiative aims at improving the state’s competitiveness by constructing a tax structure that ensures fairness and equity in its design, creates a constant but stable stream of revenue for the State’s critical services and that sets the stage for long-term strategic and sustainable spending reforms.
Regional Economic Models, Inc. (REMI) was retained by Blueprint Nebraska to perform an economic and fiscal impact analysis of the proposed policy changes. REMI is an independent company with offices in Amherst, MA and Washington, D.C. that provides non-partisan economic analysis and modeling software to its clients, who include federal, state, and local government agencies, non-profit organizations, universities, and private companies. REMI is a worldwide leader in providing dynamic regional U.S. macroeconomic and demographic models and consultative services used to evaluate tax policy as well as many other policy issues such as trade, economic development, health care, transportation, and energy.
As the basis of its analysis for years 2022 through 2031, REMI considered the following changes to the State’s policies and incentive programs:
- Broadens the tax base while maintaining the exemption for unprepared food, and largely maintaining the exemptions for medical services & equipment, and medicine
- Prevents tax pyramiding by avoiding tax on business inputs
Individual Income Tax
- Consolidates to two brackets with lower tax rates: 0% for $50k or less; 5.6% in 2022-2024, 5.3% in 2025-2027, 4.99% in 2028-2031 for $50,001+
- Eliminates Nebraska itemized deductions
Corporate Income Tax
- Decreases tax rates: 4% for $100,000 or less; 5.6% in 2022-2024, 5.3% in 2025-2027, 4.99% in 2028-2031 for $100,001+
- Eliminates both refundable and non-refundable tax credits
- Removes dependence on existing business incentives
- Doubles current R&D tax credits
- Conducts two workforce programs by forgiving student loans to attract high-skilled workers and backbone-of-local-economy manufacturing workers
Property and Other Taxes
- Eliminates inheritance tax
- Provides additional funds available for significant and strategic property tax relief
REMI’s dynamic model analysis identified positive results in Nebraska’s nine Economic Development Regions with the following incremental outcomes:
- Over 65,000 new jobs created by 2031
- Over 70,000 in additional population attracted or retained by 2031
- Increase of over $65B in GSP and over $130B in economic output over 10 years
- Increase of over $17B in investment activity over 10 years
- Addition of over $40B in personal income over 10 years ($4,800 per household)
- Over $2B for additional property tax relief over 10 years
- Almost $470M increase in new revenues created by economic growth
In this economic and fiscal study, Blueprint Nebraska makes the case for a bold and robust plan to modernize the State’s aging tax code and explains why such an effort is essential for the health and competitiveness of Nebraska’s economy. The Blueprint Nebraska framework for Tax Modernization results in a powerful instrument for understanding the role of taxation on the economic prosperity of businesses and individuals.
Blueprint Nebraska is a statewide strategic plan to grow the state economy by attracting talent and encouraging business investment. In building on the legacy and strength of Nebraska’s people, location and natural resources, the Blueprint model is focused on Growing the Good Life in every corner of the state. The full Blueprint Nebraska report can be downloaded at www.Blueprint-Nebraska.org.