Date of this Version
The purpose of this study is to show taxes faced by seven selected households based upon demographic characteristics and adjusted gross income under 2007 tax law. The study was done in response to the recent reductions in individual income and property taxes enacted in LB367 this year by the Nebraska Legislature. However, as the study evolved it became clear that the more important feature of the study is the up-todate nature of the results and the information it provides about the differences (and similarities) between the individual income, sales, and property tax structures in Nebraska and its six contiguous states, Colorado, Iowa, Kansas, Missouri, South Dakota, and Wyoming.
The laws governing calculation of tax liability for similarly situated taxpayers in each of the seven states differ markedly, while the resultant taxes are in many cases relatively close and in others, significantly different.
Sales and property taxes tend to be regressive in nature, putting a higher tax relative to income on lower-earning taxpayers, and income taxes tend to be more progressive, increasing the tax relative to income on citizens as income rises. While the study generally bears out this truism for all the states, it becomes particularly clear that Nebraska follows this pattern, with one of the more progressive income tax structures, and among the most regressive sales and property tax systems.