Nebraska’s Latest Economic Outlook Ranking: Jonathan Williams on Nebraskanomics

ALEC President and Chief Economist Jonathan Williams joined Platte Institute CEO Jim Vokal on the Nebraskanomics podcast to discuss Nebraska’s improved ranking in the annual Rich States, Poor States report.

The discussion began with an overview of ALEC and the Rich States, Poor States report as resources for legislators. Williams explained that both aim to help legislators compare their states with others and identify policies that can make them more economically competitive.

“We have an automatic group of legislators who trust what ALEC does, and they know that what we do, we do well and within our guiding principles,” Williams explained. “The basics of this report are that we want to make sure legislators can directly compare themselves with the other 49 states, because they are in direct competition with them.”

He emphasized the importance of federalism and the role of states in developing and implementing policy.

“In terms of federalism, not all ideas should be made in Washington, D.C.; they should be made in the states,” Williams said. “It’s things like Rich States, Poor States that really help separate good ideas from bad ones and show what states can do to make themselves rich states and avoid being poor states.”

Vokal then turned to Nebraska’s ranking in the latest edition of the report, noting the state improved to 27th, its best position in 19 years, and asked what drove the change. Williams credited recent income tax rate reductions for businesses and individuals as a significant factor.

“This is driven by a commitment to income tax rate reductions for businesses and individuals, and I know there was efforts from some in Lincoln and across the state to roll those back or pause those rate reductions,” Williams explained. “It was really those tax cuts and the rate reductions on income that helped fuel this improvement in Rich States, Poor States.”

The conversation then turned to the economic challenges Nebraska faces. Vokal pointed to the high-income tax rate and the inheritance tax. Williams agreed, noting that eliminating the inheritance tax and making key policy decisions could move Nebraska into the top 20 in economic outlook.

“One of the key lessons that is very clear this year in Rich States, Poor States, where it’s been clear for years, is states fall behind by standing still. Nebraska has made some great progress, but now is not the time to take the foot off the gas.”

The conversation concluded with Vokal asking for recommendations on policy reforms to help Nebraska move up in the rankings. Williams reiterated the importance of continuing income tax rate reductions.

“Keep up the great progress on the rate reductions on the personal and business income taxes,” Williams said, “because that is the price of doing business or living or working in Nebraska vis-à-vis the other states, and so kudos to everybody who retained those reductions in rates.”