NEBRASKA'S TAX SYSTEM IS 'UPSIDE DOWN,' REPORT SAYS, WITH HIGHER EFFECTIVE TAX RATES FOR LOW INCOME FAMILIES

LINCOLN- The state’s tax system is “upside down,” with low- and middle-income Nebraskans paying a higher share of their income on taxes than more affluent residents, a watchdog group claims. The OpenSky Policy Institute, citing a new national report, said that Nebraskans who are among the lowest 20% of wage earners pay an effective state and local tax rate that is 56% higher than those with the top 1% of incomes. 

OpenSky, which assesses state tax and budget policies, warned that the disparity will grow as recently passed cuts in state income taxes are phased in or if the state shifts the tax load more heavily onto sales taxes. OpenSky Executive Director Rebecca Firestone said state lawmakers have crafted policies that have led to low- and middle-income families paying higher effective tax rates than the wealthy. 

OpenSky cited the newest edition of the “Who Pays?” report from the Washington, D.C.-based Institute on Taxation and Economic Policy. That report, which analyzes the economic progressivity and regressivity of state tax systems, stated that in Nebraska, households with the lowest 20% in incomes (less than $30,000) paid 11.2% of their earnings on taxes and the middle 20% (incomes of $52,500 to $89,400) paid 11%. Meanwhile, the top 1% income households (over $557,100 in income) paid 7.2%, and the top 5% (over $252,600) paid 9.1%.

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