A move to cut income taxes in favor of higher sales taxes will lead to tax increases for 80 percent of Nebraskans, a report by the OpenSky Policy Institute shows.
“State economies flourish when policies are enacted that strengthen the middle class. LB 405 and LB 406 don’t work in that way,” said Renee Fry, executive director of the OpenSky Policy Institute. “Nebraskans who makeless than $91,000 a year will experience tax increases under these bills.”
Check out our graphs below that illustrate the various ways LB 405 and LB 406 would affect how much Nebraskans pay in taxes (click on graphs for larger versions).
Please find a note on the methodology for this analysis after the graphs.
The model used for this analysis is based on a very large stratified sample of tax returns, combined with data from other sources, to estimate the impacts of policy changes on state revenues and people at different income levels. All taxes ultimately come out of someone’s pocket somewhere, and this model estimates who and where (this is known as the “final incidence” of the tax).
For the sales tax, the model uses available data on both business-to-consumer sales and business-to-business sales, including those that are currently subject to the sales tax and those that would become subject to the tax under the proposed expansion. Based on that information, the model allows us to estimate how those new taxes are likely to find their way into the price of various goods, and how that ultimately affects family budgets at different income levels.