Louisiana, Again, Ranks Near the Bottom on a “Good” List

Louisiana, Again, Ranks Near the Bottom on a “Good” List

The non-partisan Tax Foundation recently released its 2020 State Business Tax Climate Index, which measures how each state ranks on its business taxes. For those who have noticed jobs and opportunity uprooting from Louisiana to go elsewhere, the results of the index don’t come as a shock.

Louisiana’s business tax climate ranks 41st overall thanks to a dastardly combination of several types of taxes at high rates and a confusing tax structure. The states that rank well on the index tend to either levy only a fraction of the types of taxes you’ll find in Louisiana or do so at low rates. Louisiana currently has the 37th highest corporate tax rate, 32nd highest individual income tax rate and the coup de grace of 48th highest sales tax rate.

With the diversity of types and rate at which Louisiana’s government taxes entrepreneurs, it’s no wonder that businesses are leaving our state and looking for other places to set up shop.

But, it’s not just the high rates and large number of taxes that cause the Pelican State to struggle with its tax structure. Louisiana’s tax code is also riddled with exemptions, ranging from tax credits to businesses to cities interpreting on which items they collect sales taxes. Certainty is often one of the most important factors for both established businesses and entrepreneurs, but because of the complexity of Louisiana’s tax code, it offers precious little certainty.

So, what exactly can be accomplished with a competitive business tax climate? You need only look one state westward. Texas ranks 13th on the index, according to the Tax Foundation, and the results from this ranking are evident to those living in Louisiana. It seems that too often we hear about our family members, friends and neighbors racing to the border of Texas in search of the jobs and opportunity our state is lacking.

But, Texas isn’t the only state succeeding due to its business tax climate. Florida, which ranks 4th, is also reaping the benefits of a solid business tax climate. The Sunshine State is adding 900 residents each day, while contrarily, Louisiana has been losing residents year after year.

Tennessee, which recently began the phase out of their last vestiges of their income tax known as the Hall Tax, has also seen an economic boom. Its overall economy grew by 3.1 percent in 2018, faster than the national average, while Nashville has the 10th fastest growing job market in the nation.

However, this doesn’t have to be a fate that dooms Louisiana.

North Carolina ranked 44th in the Tax Foundations State Business Tax Climate as recently as 2014. Louisiana at the time actually ranked higher with a 33rd overall ranking. But since then, North Carolina has enacted massive cuts to its tax rates to not only improve its ranking to 15th overall but has also seen massive economic growth.

Last year, North Carolina added 81,000 new net jobs, its unemployment rate fell to 3.9 percent and the earnings of workers increased by 1.3 percent. The state now has 8.5 percent more jobs than it did at its peak in 2007. These tax cuts haven’t just produced prosperity for people. They have also filled government coffers, allowing the state to invest in infrastructure, education and to put money in its rainy day fund.

With this kind of transformation in just five years, why can’t Louisiana do the same?

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