As a state founded on agriculture, property taxes have been an issue in Nebraska since the beginning. The Tax Foundation ranks the Cornhusker State as having the seventh-highest average property tax rate. An upcoming report from the Platte Institute for Economic Research, by Sarah Curry and Adam Weinberg, finds that if Nebraskans want to make a big change on this intractable problem, they’re going to have to get real about the difficult tax policy choices involved.
Nebraska’s tax code is not designed with broad bases and low rates in mind. In fact, sales tax exemptions in the state cost almost as much as the entire sales tax and income tax return in annual tax receipts.
Current limitations on local property taxing authority haven’t been able to keep a lid on the growth of taxes either, as valuations have increased across the state. Unlike many states, Nebraska taxes residential and commercial property at full market value, agricultural land at 75 percent of market value, and allows total property tax rates to exceed 2 percent.
In the forthcoming report, “Get Real About Property Taxes,” Curry and Weinberg discuss how ending exemptions in the sales tax base and tightening limitations on property taxes may be one of the only ways to balance the government’s need for revenues and taxpayer desire for a more predictable tax system. Learn more in late October here.