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Nebraska Joins the Tax-Cutting Wave
Other than doing very well in rankings of state pension debt (see here, here, and here), I’ve never had any reason to notice public policy in Nebraska.
That changes today because the Cornhusker State has – like about two dozen other states – lowered income tax rates.
The widespread shift to better state tax policy is a very positive development, second only to the really great news about school choice.
Let’s take a closer look about the good news from Nebraska.
The Wall Street Journal editorialized about the state’s new tax changes, including some special attention for the improvements in business taxation.
The gulf between high- and low-tax states keeps growing, and Nebraska is the latest to use budget surpluses to cut income and property taxes—and in a big way. …An income-tax cut will bring the top rate down to 3.99% from 6.64% by 2027, and a separate cut will slash the corporate tax to the same 3.99% rate from 7.25% today.
…A two-year term limit for legislators has helped produce crops of increasingly market-friendly lawmakers. Interstate competition has also kept the tax pressure on. …neighboring Missouri cut its top rate on income to 4.95%, and Iowa followed up its recent flat-tax plan with additional cuts to property taxes. …More than half of all states have reduced their income-tax rates since 2021… Fewer states have cut corporate rates. In slashing its tax on businesses, Nebraska will leapfrog its neighbors to boast the lowest rate in the region after zero-tax South Dakota and Wyoming.
Kudos to Nebraska. They’ve moving from Column 4 to Column 3 in my state tax ranking.
The next step hopefully will be a flat tax.
P.S. Some state tax cuts are hardly worthy celebrating.
P.P.S. Massachusetts and Washington are among the few states moving in the wrong direction.
We should lower federal taxes because jobs are going to states like Texas that have low taxes. (We should lower state taxes too!!)
What Can We Learn by Comparing the Employment Situation in Texas vs. California?
April 3, 2013 by Dan Mitchell
One of the great things about federalism, above and beyond the fact that it both constrains the power of governments and is faithful to the Constitution, is that is turns every state into an experiment.
We can learn what works best (though the President seems incapable of learning the right lesson).
We know, for instance, that people are leaving high-tax states and migrating to low-tax states.
We also know that low-tax states grow faster and create more jobs.
I particularly enjoy comparisons between Texas and California. Michael Barone, for instance, documented how the Lone Star State is kicking the you-know-what out of the Golden State in terms of overall economic performance.
I also shared a specific example of high-quality jobs moving from San Francisco to Houston. And I was also greatly amused by this story (and accompanying cartoons) about Texas “poaching” jobs from California.
In this discussion with Stuart Varney of Fox News, we discuss how Texas is leading the nation in job creation.
But there’s another part of this discussion that is very much worth highlighting.
As illustrated by the chart, we are enduring the worst overall job performance in any business cycle since the end of World War II.
I note in the interview that Obama inherited a bad economy and that Bush got us in the ditch in the first place with all his wasteful spending and misguided intervention.
But Obama also deserves criticism for doubling down on those failed policies.
His so-called stimulus was a flop. Dodd-Frank is a regulatory nightmare. Obamacare is looking worse and worse every day.
No wonder job creation is so anemic.
The real moral of the story, though, is that the poor are the biggest victims of Obama’s statism. They’re the ones who have been most likely to lose jobs. They’ve been the ones to suffer because of stagnant incomes.
Sort of brings to mind the old joke that leftists must really like poor people because they create more of them whenever they’re in charge.
P.S. Speaking of jokes, here’s an amusing comparison of Texas and California. If you want some California-specific humor, this Chuck Asay cartoon is great. And to maintain balance, here’s a Texas-specific joke on how to respond to an attacker.
P.P.S. To close on a serious point, California would be deteriorating even faster if it wasn’t for the fact that the state and local tax deduction basically means that the rest of the country is subsidizing the high tax rates in the not-so-Golden State. Another good argument for the flat tax.
P.P.P.S. At the bottom of this post, you’ll find a great Kevin Williamson column dismantling some sloppy anti-Texas analysis by Paul Krugman.
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Even though Chuck Asay is one of my favorite cartoonists (see here, here, here, here, and here), I was not a big fan of one of his recent two-frame cartoons.
But he has more than made up for that slight transgression with this new gem.
I’m biased, of course, since I’ve already written about California being the Greece of America, but there’s plenty of evidence to justify Asay’s cartoon.
The Daily Hatch 