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Nebraska has traditionally been well-cushioned against large fluctuations in the national economy due to its combination of farm and non-farm industries.
Nebraska is the 16th largest state in area and the 38th largest in population. Its capital is located in Lincoln and Omaha is its largest city. Agriculture is the driving force for Nebraska’s economy, though more of Nebraska’s income has come from other industries in recent years. Expanding and diversifying Nebraska’s economy remains a top priority for state government.
The vast majority of the state’s land (96+ percent in 2001), was farm and ranch land, mostly privately owned producing food for consumers in the United States and abroad. The state’s fertile soil, abundant water, intensive cultivation, and advanced farming methods produce high crop yields and the state is a national leader in crop production with corn topping the cash crop list. Nebraska also is a leader in livestock production and agriculture equipment production.
Nebraska's economy has been diversifying rapidly. Since the 1950s, farms have become larger in size (growing from 444 acres (180 hectares) in 1950 to 885 acres (358 hectares) in 1997) and fewer in number (from 109,000 to about 51,500) due to efficiencies from machinery and modern farming methods, thereby decreasing the need for farm workers. This trend has caused a population shift as many rural residents move to larger communities in search of jobs, generating new efforts to increase industry in Nebraska. During the 1960s, manufacturing employment increased sharply, partly as a result of campaigns to attract new businesses to the state. Service industries also experienced rapid growth.
Manufacturing is a major employer among non-farm industries in Nebraska. Food processing is the leading type of manufacturing, followed by industrial machinery and electronic equipment. The service sector (including health and business services) generates the most earnings in Nebraska and employs more workers than any other industry. Government ranks second in earnings generated, while manufacturing is third. Wholesale and retail trades employ the second-most number of workers. Government jobs, many of which are in Lincoln, employ the next highest number of workers.
Five Nebraska-based businesses are in the Fortune 500. And a major federal presence in the state is Offutt Air Force Base, near Bellevue, employing nearly 9,800 military and civilian personnel. The base is home to U.S. Strategic Command, which manages the nation’s strategic forces in order to deter attacks against the United States.
Omaha repeatedly ranks in the top 15 or better for livable cities in a number of indicators including economic and quality of life, air and water quality, open space, and population stability by Forbes magazine. Year after year, national publications note the high quality of life Omahans and Nebraskans enjoy. Omaha is consistently rated in the top 20 percent of the best places to live by Places Rated Almanac. The state also enjoys one of the lowest crime rates in the country.
In 2002 Nebraska had a per capita personal income (PCPI) of $29,182. This PCPI ranked 26th in the United States and was 94 percent of the national average, $30,906. The 1992-2002 average annual growth rate of PCPI was 4.2 percent. The average annual growth rate for the nation was 4.0 percent. The relative price levels for consumer goods and services in Omaha range up to 19.1 points below the national index of 100 for six major components of grocery items, housing, utilities, transportation, health care, and miscellaneous goods and services.
Numerous companies have discovered that Nebraska offers the ideal location, quality workforce, and positive economic environment for a wide variety of industries and business endeavors. The state has a progressive, pro-business tax climate; companies who invest in the state and hire Nebraskans are rewarded with reduced or virtually eliminated corporate income and sales taxes for up to 15 years.
General Tax Incentives include:
- No property tax on business inventories including raw materials, goods in process and finished goods.
- No sales or use tax on energy for manufacturing use.
- Sales Tax refund for pollution control equipment.
- No State property tax.
- No tax on intangibles.
- Performance-based income tax credits, sales tax refunds, and property tax exemptions.
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Nebraska spends more on corporate tax incentives as a percentage of personal income than any other state. Most Nebraska state revenues are generated through sales and income taxes. Other revenue sources include taxes on insurance premiums, gasoline, tobacco, and liquor.
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