Louisiana: Rich State or Poor State?
Report ranks LA 33rd in economic performance, 28th in economic outlook
The 2016 Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index ranks the economic performance and outlook of states.
The Economic Outlook Ranking is a projected forecast based on each state’s current standing in 15 state policy areas. According to the Index, states that spend less and tax less typically have higher growth rates.
Louisiana’s economic outlook was ranked 28th most competitive in the country.
|Policy Area||Louisiana Data||Louisiana Rank|
|Top Marginal Personal Income Tax Rate||3.62%||11|
|Top Marginal Corporate Income Tax Rate||5.20%||13|
|Personal Income Tax Progressivity (change in tax liability per $1,000 of income)||$10.16||30|
|Property Tax Burden (per $1,000 of personal income)||$20.86||7|
|Sales Tax Burden (per $1,000 of personal income)||$35.98||45|
|Remaining Tax Burden (per $1,000 of personal income)||$16.07||16|
|Estate/Inheritance Tax Levied?||No||1|
|Recently Legislated Tax Changes (2014 & 2015, per $1,000 of personal income)||$3.32||48|
|Debt Services as Share of Tax Revenue||9.0%||35|
|Public Employees Per 10,000 of Population (full-time equivalent)||565.5||39|
|State Liability System Survey (tort litigation treatment, judicial impartiality, etc.)||46.5||49|
|State Minimum Wage (federal floor is $7.25)||$7.25||1|
|Average Worker’s Compensation Costs (per $100 of payroll)||$2.23||41|
|Right-to-Work State? (option to join or support a union)||Yes||1|
|Number of Tax Expenditure Limits (0=least/worst 3=most/best)||2||3|
*1=best, 50=worst. The report notes “data reflects state and local rates and revenues and any effect of federal deductibility.”
While Louisiana’s rank has declined since 2015, when it ranked 26th, most of its neighboring states have improved.
Arkansas ranked 22nd in 2015 and now ranks 20th in 2016, Florida ranked 15th and is now 8th, Mississippi was 20th and is now 17th and Tennessee was 17th and is now 7th. Despite Alabama and Texas breaking this trend and ranking worse than they did in 2015, both states are still in better shape than Louisiana.
Texas fell one spot from 11th in 2015 to 12th in 2016, and Alabama ranked 19th in 2015 and is now 21st.
The Economic Performance Ranking is based on the past 10 years of a state’s performance in State Gross Domestic Product (GDP), Absolute Domestic Migration (ADM) and Non-Farm Payroll Employment (NPE).
The index ranks Louisiana 33rd most competitive overall economic performance. By comparison, Texas ranks 1st, Florida ranks 18th, Tennessee ranks 20th, Arkansas ranks 24th and Alabama ranks 29th.
Compared to its neighbors, Louisiana ranks relatively well in GDP and middle-of-the-road in NPE. However, its ADM ranking is significantly worse.
From 2005-2014, the Pelican State’s cumulative ADM was -230,747, meaning nearly 231,000 people moved out of Louisiana. While the majority of Louisiana’s out-migration was in 2006 – after Hurricane Katrina – it is important to note that net out-migration was a problem before Katrina.
A report from the US Census Bureau found from 2000-2004 Louisiana’s net migration was -16,945. The report ranked it 43rd highest annual net domestic migration in the nation. Meanwhile, Florida had the highest net domestic migration rate, at 190,894, and Texas and Tennessee were both among the top 10.
A graph included in the ALEC-Laffer State Economic Competitiveness Index shows Louisiana residents still choose to relocate to new states even several years after hurricane Katrina. According to the graph, Louisiana has been experiencing net out-migration since 2012.
With that in mind, it is important to note that the 8th edition – 2015 publication – of the Index points out that people often leave states in search of better economic conditions:
“The most important demographic trend in America today is the shift of people and economic resources from the higher tax and regulation states of the Northeast to the lower tax states of the South.* This is happening day after day and the cumulative effect of this migration from the high to the low tax states has increased the economic power and political clout of Southern states.
However, not all of the Southern states have pro-growth policies, and not all of the Northeastern states do the wrong things.”
Clearly, Louisiana does not offer enough opportunity to keep its residents around.
All findings of the 2016 Index considered, the regimen for Louisiana is clear. Louisiana needs to adopt more fiscally responsible policies, including a tax policy overhaul if it wants to improve its Economic Outlook and become more hospitable to individuals and businesses.
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