Tax Reform in Nebraska: Income Taxes vs. Sales and Use Taxes

American Legislator ^ | 12-5-13 | Will Freeland

[ThethoughtsofGreg]

A recent study by the Nebraska Department of Revenue (DOR), intended to inform the members of Nebraska’s Commission on Tax Modernization, confirms what pro­growth tax reformers have long argued: tax cuts lead to personal income growth, investment growth, and job growth. Though the study incorrectly found sales tax cuts to be a greater boon to state economic performance than income tax cuts, the study notes that even after accounting for offsetting cuts to government spending, tax cuts of any kind would provide a boost to Nebraska’s economy.

At the direction of the Nebraska legislature, the DOR compared the presumed economic consequences of a static $100 million initial revenue cut from both an income tax cut and a sales tax cut. The study then goes on to project the job growth, income growth, investment growth, and offsetting tax revenue (known as the Laffer effect based on the Laffer curve) the state could expect from a tax cut. The study suggests that a sales and use tax cut would outperform an income tax cut in every category.

[Roccus]

Income Taxes vs. Sales and Use Taxes

They will have both.

[El Cid]

They will have both.

If it was the Feds, or a Blue State -- I'd say absolutely. But who knows, maybe the Nebraskans have their heads screwed on right.