by Scott Drenkard
Tax Foundation
February 19, 2014
Discussing principles of sound tax policy—simplicity, neutrality, transparency, and stability—Scott Drenkard evaluates tax policy reforms in a recent Nebraska legislative proposal. Lowering the top corporate rate from 7.81 percent to 5.9 percent makes Nebraska competitive with more of its neighbors, all of which currently have lower rates. The bill also lowers the top individual income tax rate from 6.84 percent to 5.9 percent by 2018. The bill cuts taxes on the lowest bracket immediately and then phases in reductions to the upper brackets. These upper brackets are often what matters most to business activity, so these individual income tax cuts will work in concert with the corporate rate cut to promote job growth. Finally, the proposal to inflation-index Nebraska’s income tax brackets protects taxpayers against automatic tax increases that currently occur each year without a legislative vote.

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