Modernizing Nebraska’s Tax Code

A Growth Blueprint for District 38 and Beyond

By Jon Capps, Candidate for Nebraska Legislature

Executive Summary

Nebraska’s tax system wasn’t designed for today’s economy.

It evolved piece by piece over decades, responding to short-term pressures rather than long-term strategy. The result is a system that works harder against growth than alongside it — over-relying on property taxes, penalizing investment, and placing unnecessary friction on families, farmers, and small businesses.

Modernizing Nebraska’s tax code isn’t about shifting burdens or chasing gimmicks. It’s about building a system that grows with the economy, spreads responsibility broadly, and supports rural communities instead of squeezing them.

This paper outlines a practical, growth-focused approach to tax modernization — one that protects what works, fixes what doesn’t, and positions Nebraska to compete for the next generation of jobs, families, and investment.

The Problem with the Current System

Nebraska’s tax challenges are structural, not moral.

1. Overreliance on Property Taxes

Property taxes have become the default funding mechanism for local government because the broader system gives few alternatives. This places disproportionate pressure on:

• Farmers and ranchers

• Homeowners

• Small businesses with fixed assets

Property taxes rise regardless of income, margins, or market conditions — making them especially harmful in rural communities.

2. Taxes That Penalize Growth

Nebraska still relies on taxes that discourage:

• Capital investment

• Equipment upgrades

• Expansion and reinvestment

When growth is taxed more heavily than stagnation, the system quietly signals businesses to delay or move elsewhere.

3. Complexity and Fragmentation

The current tax code is:

• Hard to understand

• Costly to comply with

• Inefficient to administer

Complex systems increase compliance costs, reduce transparency, and create winners and losers based on access to specialists — not merit.

A Better Approach: Grow the Base, Lower the Pressure

A healthy tax system doesn’t chase revenue — it earns it through growth.

Nebraska should aim for a tax structure that is:

• Broad-based instead of narrow

• Predictable instead of volatile

• Neutral toward investment and innovation

In systems design, this means distributing the load rather than concentrating pressure. It's a principle that applies just as well to tax policy.

Core Principles for Tax Modernization

1. Broaden the Tax Base

• Reduce overreliance on any single tax source

• Ensure growth contributes fairly to public services

• Avoid forcing local governments into property tax dependence

A broader base allows rates to be lower and more stable.

2. Flatten and Simplify

• Fewer brackets

• Clearer rules

• Lower compliance costs

Simpler systems are fairer, easier to administer, and more attractive to businesses deciding where to locate or expand.

3. Stop Penalizing Investment

• Eliminate or reform taxes that discourage equipment purchases, modernization, and reinvestment

• Reward long-term commitment to Nebraska communities

Investment should be the engine of growth, not a liability.

4. Use Incentives Sparingly and Accountably

Targeted incentives can make sense when they meet clear standards:

• Transparent

• Performance-based

• Time-limited

• Deliver measurable local benefit

Broad-based growth should always be the priority over carve-outs.

What This Means for Rural Nebraska

Modernizing the tax code isn’t about favoring urban over rural — it’s about giving rural communities the tools to thrive.

A growth-oriented system means:

• Less pressure on land and homes

• More Main Street investment

• Stronger local tax bases

• Greater ability to fund schools, infrastructure, and public safety without constant increases

When growth pays the bills, rural communities aren’t forced to choose between services and affordability.

Accountability Matters

Modern tax systems require modern accountability. Any reform should include:

• Clear performance metrics

• Transparent reporting

• Sunset provisions that force regular review

If a policy doesn’t deliver results, it should be reevaluated rather than permanently embedded.

Conclusion

Nebraska doesn’t need radical tax experiments. It needs thoughtful modernization grounded in reality.

By broadening the base, lowering pressure, and removing penalties on growth, Nebraska can build a tax system that supports families, strengthens rural communities, and secures long-term prosperity.

The goal isn’t to collect more. The goal is to grow more and let that growth work for everyone.

— Jon Capps