Most people take for granted that the sales tax is the tax we pay when we buy things. But if you look carefully at your receipts, you’ll begin to notice most of the things you buy in Nebraska don’t have sales tax collected on them. This is also known as a sales tax exemption.

On one hand, you might say “hey, that’s great, one place I’m finally getting a tax break.” On the other hand, Nebraska has many other high tax rates, and complex taxes that other states just don’t have.

In the 2019-2020 fiscal year, about 58% of Nebraska’s state general fund revenue came from income taxes, while 38% was sales tax. That’s a difference of just under $1 billion. On top of that, Nebraska local governments levy $4.5 billion in local property taxes annually.

Sales tax exemptions contribute to these problems, putting higher taxes on our workforce, housing, and investing in Nebraska.

Tune into the latest episode of Nebraskanomics, Making Cents: Why Nebraska Should Modernize the Sales Tax, Part 1.

In this episode, I’m going to discuss the reasons why Nebraska should modernize its sales tax so that there are fewer exemptions and more options for removing barriers in Nebraska’s tax system. There are actually more reasons than I have time to share with you on a single episode of Nebraskanomics, so this will be a two-part series.

Here are the three reasons we’ll discuss on this episode:

A modernized sales tax makes more sense than the tax system we have now. (02:20)
As times and technologies change, so should our sales tax base. (06:43)
Virtually all tax and economic policy experts agree with the principles of sales tax modernization. (10:14)

But even though there is broad agreement on these principles, that doesn’t mean tax experts agree on what should be done with the money the sales tax raises. Tune in to our next episode, where I’ll discuss how sales tax modernization can help Nebraska have a better tax system that is simple, sustainable, and supports economic growth.

Click to listen to the episode.

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If you want more economic freedom in Nebraska, please visit PlatteInstitute.org to make a donation to help fund our research and advocacy.

❌It’s time to stop the status quo.

Let’s remove economic barriers and make Nebraskans proud.

Truth in Taxation

NebraskanomicsBy Platte InstituteJan 27, 2021