LINCOLN — Nebraska didn't improve Wednesday in a national tax ranking often cited by Gov. Dave Heineman, and it ended up looking a little worse.
But an economist with the Washington D.C.-based Tax Foundation said Nebraska should climb several spots in the next rankings, putting it among the Top 30.
In its annual rankings of states' business tax climate, the Tax Foundation ranked the Cornhusker State No. 34, far behind the nation's most attractive tax state, Wyoming.
Iowa ranked 40th.
Nebraska's ranking is slightly lower than a year ago, when the state was ranked No. 31.
But Scott Drenkard, lead author of the Tax Foundation report, said that a recent change in methodology caused the organization to refigure last year's ranking, and Nebraska ended up No. 34. That's the same as its latest ranking.
That fact made little difference to the governor, whose spokeswoman, Jen Rae Wang, said Wednesday that regardless of the state's exact ranking, the report provided further evidence that Nebraskans need tax relief.
A week ago, Heineman told reporters that Nebraskans won't tolerate such low rankings for its football team or its taxes.
But a University of Nebraska-Lincoln economist, who has studied such national tax rankings, cautioned against reading too much into such rankings.
John Anderson of UNL said the rankings can exaggerate slight differences in tax systems. For instance, he said, a tax system ranked 31st was probably about the same as one ranked 34th.
Each ranking, Anderson added, has an inherent bias based on what a pollster thinks is important. The Tax Foundation rankings, he said, put a heavy emphasis on taxes that affect business and give more credit to states that go without certain taxes, such as Wyoming, which doesn't levy a state income tax.
The governor has often referred to the Tax Foundation's rankings as an indicator of the state's “mediocre” tax system and the need for tax relief.
The Legislature is midway through a study of the fairness and sustainability of the state's tax system.
Drenkard, of the Tax Foundation, said he expects Nebraska to climb six or seven spots in the rankings next year, after two tax bills passed by the Legislature go into effect. Those changes did away with the state's alternative minimum tax and allowed businesses more time to write off losses on their state taxes.
Drenkard was a co-author of a recent report on tax policy commissioned by the Omaha-based Platte Institute. It concluded that the state's tax climate could be improved by cutting income taxes and shifting the load onto currently untaxed items or services, such as purchases of funeral and burial services, haircuts and publications