Principles for a Privilege-Free Tax System, with Applications to the State of Nebraska
47 Pages Posted: 7 Jun 2018
Date Written: 09/16/2014
Tax codes in US states contain a wide variety of special privileges for specific industries, firms, individuals, and types of economic transactions. This paper outlines the main types of privileges in state sales, property, and income taxes. A detailed analysis of the tax privileges in the state of Nebraska provides information for a state that is in the process of potentially reforming its tax code. In Nebraska the total forgone revenue due to tax privileges amounts to just over $2 billion, compared with roughly $7.2 billion in total revenue collected by the relevant taxes. Eliminating these privileges and simultaneously lowering tax rates could save an average Nebraskan family more than $3,200 dollars if the benefits of tax reform are evenly distributed, with no reduction in government services.
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