Barry Kennedy, president of the Chamber, says a single taxpayer earning a little less than $30,000 should not pay the top income tax rate of nearly seven percent.
He says Iowa is the only neighboring state with a higher rate.
“All the others either have a lower rate or no income tax. South Dakota and Wyoming do not have an income tax,” Kennedy tells Nebraska Radio Network. “Iowa’s is higher, but it has a much higher [income level] threshold and it is deductible. That makes a huge difference.”
Kennedy says the Chamber suggests a top tax rate of no more than six percent and raising the top income thresholds.
“Over a period of time, reduce that high effective rate at least down to about five and a half [percent],” he says. “That would make us look a lot more competitive, compared to our neighboring states.”
Kennedy says Chamber members tell him they have a hard time attracting employees due to the state’s tax system.
He adds that reducing tax rates does not necessarily mean lower revenue for the state.
“If you can grow our population, get it up to around that two million mark, those people would be buying homes and paying property taxes, they’d be buying all kinds of goods and services and paying sales taxes, and of course, they’d be paying income taxes on their earnings,” Kennedy says.