Rural Nebraskans pay more property/income taxes than urban residents
Nebraskans in areas with high amounts of agricultural land (rural areas) paid more property and state income taxes in recent years than people in areas that have the least agricultural land (urban areas), an analysis by OpenSky Policy Institute shows.
The analysis shows Nebraskans in rural areas pay more income and property taxes both on a per-capita basis and as a share of income than do those in more urban parts of the state.
“Although income taxes paid in rural areas are lower, property taxes there are higher so that rural residents pay more when both taxes are combined,” said Renee Fry, executive director of OpenSky Policy Institute.
It was once true that urban Nebraskans generally paid slightly more per person than rural Nebraskans, but the OpenSky analysis shows this situation reversed around 2007.
By 2012, the last year for which such data are available, rural Nebraskans paid more than $1,000 more per person than their urban counterparts — a difference of nearly 40 percent.
“Many believe that Nebraska farmers and ranchers pay little or no state income taxes and that balances out the fact that they pay more in property taxes,” Fry said. “But this analysis shows an imbalance that has rural Nebraskans paying more taxes than urban residents in recent years.”
The skyrocketing value of Nebraska’s farm and ranch land has contributed to this growing imbalance, the analysis shows, as from 2003 to 2012, agricultural land in Nebraska saw a 116 percent increase in value for tax purposes, while commercial and residential property each increased 45 percent.
The analysis also noted that efforts to relieve pressure on agricultural land owners – such as reducing the valuation of agricultural land for tax purposes to 75 percent — have not been as effective as intended.
Nebraska’s tax imbalance already has created problems regarding fiscal issues like school funding as Nebraska, Fry said, noting that agricultural producers have seen their share of our K-12 bill increase along with the rise in their property taxes.
“If Nebraska heeds the calls of some and cuts income taxes, these fiscal issues and rural-urban tax disparities are likely to be exacerbated,” she said.