But state has ‘incredibly high’ sales taxes that affect poor, working class
WASHINGTON – Louisiana has the fourth-lowest tax burden in the nation for its residents with an average “burden” of 7.8 percent in state and local taxes of an individual’s income, according to a new study released Tuesday.
The “Annual State-Local Tax Burden Ranking” by the nonpartisan, Washington, D.C.-based Tax Foundation shows that Louisiana trails only Alaska, South Dakota and Tennessee in the lowest percentage average tax burden.
“We are looking at the individual taxpayer and not the tax collector,” economist and lead author Elizabeth Malm said.
Alaska, for instance, takes in the highest percentage of tax collections in the nation but most of that money comes from oil corporations and not Alaskan residents, Malm said. As such, the tax burden for the average Alaskan is the lowest in the nation at 7 percent.
The U.S. average tax burden was 9.9 percent and New York and New Jersey led the way at 12.8 percent and 12.4 percent, respectively, according to the report.
In the Southern region, Louisiana, Texas, Alabama, Tennessee and South Carolina are all among the 10 lowest tax burdens.
Using the latest full statistics from 2010, Malm said, Louisiana had the second biggest dip in its average tax burden, dropping from 8.2 percent in 2009 to 7.8 percent.
That dip was caused largely because of income tax cuts, Malm said, largely the result of the Louisiana Legislature undoing the so-called Stelly tax swap. Malm also noted that the average income in Louisiana dropped to $36,776.
Despite having one of the lowest overall tax burdens, Louisiana actually has the nation’s highest combination of state and local sales taxes in the country, according to the Tax Foundation.
But Louisiana has the income tax cuts and among the nation’s lowest property tax rates and collections, partly because of the homestead exemption.
The Tax Foundation reported earlier this year that Louisiana has the second-lowest tax-collection growth rate nationally above only Hawaii.
Jan Moller, director of the Baton Rouge-based Louisiana Budget Project, said the evidence is clear that Louisiana has a “regressive” tax structure that unduly burdens the lower and working-class citizens because of the “incredibly high” sales taxes.
“The real story here is not the overall tax rate, but the question is who pays,” said Moller, whose policy group advocates for low- and moderate-income people.
It has advocated for tax increases in the past.
Low taxes for wealthy Louisianians have done nothing to help the state’s poor, he said, and, as such, Louisiana has one of the nation’s highest income inequality ratings.
Gov. Bobby Jindal declined an interview request Tuesday, but he had a much more optimistic reaction to the report in an email response.
“This is great news for our state, and combining these results with substantive tax reforms that make our rates fair and flatter will result in continued economic growth and more opportunities for our people,” Jindal stated.
The governor is planning to make state tax code reform a top priority for 2013.
He has said he wants the tax code to become simpler and fairer for the middle class and businesses.
Earlier this month, the Tax Foundation ranked Louisiana 32nd nationally when it comes to taxes on businesses.
The State Business Tax Climate index collects data on more than 100 tax provisions for each state and compares states to each other.
The index focuses on whether the state’s tax code itself enhances or harms the competitiveness of its business environment.