Advocates of expansive Louisiana government argue for tax increases at the center of recent budget debates by alleging the state has relatively low taxes. The hard numbers suggest otherwise.
For example, Democrat Gov. John Bel Edwards has touted a report by the Tax Foundation that places Louisiana in the bottom ten of tax burden, measured by taxes paid to state and local governments as proportion of total state income for filers. Additionally, others point out the state’s “tax freedom day” tied for the earliest, computed by the Foundation by taking all federal, state, and local taxes and dividing them by the state income, then calculating the day of the year that falls.
However, the Foundation uses outdated 2012 tax burden data, well before the series of punishing tax increases that hit the state in 2016 and 2017. As well, the state scores parsimoniously on tax freedom day because local taxes, on property in particular, rank relatively low. And, neither database include corporate taxation, where the proportion Louisiana entities pay exceeds the national average.
More current data paint a different picture. Website WalletHub computed Louisiana has having the 27th highest tax burden among the states. Additionally, the Foundation places the state’s business tax climate eighth from the bottom of states, with a high sales tax component most responsible for that.
And that one area with unambiguously high taxes, on sales and use, those who want the state to raise and spend more actually would rather not see renewed. Having the nation’s highest general rate bothers them, as they prefer higher taxes come on incomes and especially on corporations, with the tax burden for these ranking among the lowest dozen states.
They fault higher reliance on this consumption tax for regressivity, or paying out a higher proportion of income as income decreases, in Louisiana’s code According to the leftist Institute for Taxation and Economic Policy (although this study’s data does not include the recent tax hikes which cut both ways and has some methodological and definitional issues), Louisiana has a bit more regressive system than the typical state.
Still, to keep things in perspective, the older ITEP data indicate that the typical taxpayer in the lowest quintile pays a paltry $109 a year in taxes while the typical person in the highest quintile pays $11,761 annually, or almost 108 times more. And it’s almost certain that the lowest fifth get much more a year in terms of government benefits that don’t count as income – in Louisiana households of a single parent with two children across seven common welfare programs in 2013 qualified for $26,538 in benefits or in pretax terms $10.70 an hour for a standard work week – as do those in the highest fifth.
If raising taxes to fund governmental services must happen, it needs to take place at the appropriate level – imposed by local governments on property shielded by the nation’s highest homestead exemption. Then these can quit begging the state for money that causes excessive spending at that level.
Jeff Sadow is an associate professor of political science at Louisiana State University Shreveport. His views do not necessarily express those of his employer or this newspaper.
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