The primary purpose of the Study was to determine the rate needed for a consumption tax on new products and services to replace the revenue collected by the current tax system consisting of property, income — including inheritance — corporate, and sales taxes. This amount of revenue, $11.67 Billion, is represented by Bar A of the chart above.
Bar B in the chart represents the current sales tax base projected to January 1, 2026, $60 Billion. This tax base is insufficient to replace the five taxes listed above at a reasonable rate.
The key to keeping the rate low is to expand the base. Currently our sales tax excludes more dollars than those taxed. Bar C represents that amount of money, $75 Billion. Furthermore, there will be positive changes in behavior because of the benefits offered by no longer taxing Nebraskans' real estate, income, or business activity.
The Beacon Hill Institute's dynamic model projects the additional tax base generated by that change in behavior, represented here by Bar D, $27 Billion.
All these taken together produces a tax base of $162 Billion as of January 1, 2026, represented by Bar E — plenty to produce a comfortably low rate of 7.23%.
Simple multiplication of the $162 Billion by 7.23% produces the $11.67 Billion represented by Bar F, precisely the amount required, represented by Bar A.
To produce the results illustrated graphically above required a detailed study. The Consumption Tax Institute, Inc. (CTII) engaged a professional economics firm headquartered in Boston, Massachusetts, the Beacon Hill Institute. The study, including considering a grocery exemption, was completed in February, 2023. It may be found here: