Louisiana Residents Face the 8th Lowest Taxes in the US
ARTICLE NOTE: There are a lot of numbers inside this article, and all will be sourced. The figures will be with links to cite those sources.
It's the time of year where everyone is talking taxes. There are ads for tax prep services everywhere you look or listen. People are worried about their filings, and concerned about their returns. So yeah, there are A LOT of people talking taxes right now. Although its true that some people never stop talking taxes.
The people who never stop are often concerned about their taxes, or at least their perception of their taxes. Even when Louisiana is ranked as having the 8th lowest taxes in the US.
Often I hear that Louisiana is the "most taxed state" or "our taxes are higher than anyone else". Which always sounds a little odd to me. I moved to Louisiana a few years ago, after living in Michigan and Wisconsin. In both of those states, my personal tax burden was way higher than what I experience here in Louisiana.
In Wisconsin, the Property Taxes Paid as a Percentage of Owner-Occupied Housing Value is 1.38%, while in Michigan it's 1.24%, and in Louisiana its just 0.51%. Those numbers actually make Louisiana one the lowest in the country for property tax.
Over at personal finance website, Investopedia. Over there, they rank Louisiana as the 3rd best state for property taxes as a percentage of average home value. So what does that look like? The site says "Louisiana is another state on our list with both a low effective property tax rate and typical home values that are well below the national average. In 2021, gas in Louisiana was taxed at 20 cents per gallon—one of the lowest rates in the country—and its cost of living, while not the lowest, was still better than 34 states and the District of Columbia." With those numbers, it would put Louisiana behind only Alabama (#2) and Hawaii (#1) for the lowest in the country.
Louisiana is starting to sound like a "tax friendly" state, unlike the phrases I've been hearing about "most taxes" or "highest taxes". Interestingly, Louisiana is often labeled as "tax friendly" by outside sources. It's the exact phrase that Yahoo Finance uses to rank Louisiana in the Top 10 Most Tax-Friends States in the country. Which by the way, does factor in the state's sales tax.
In fact, while people in the state argue that the state's taxes are why people aren't moving here, or leaving the state, outside sources (especially in the personal finance world) are pointing at the low taxes as a reason people should move here.
The site GoBankingRates.com even put out an article titles "Thinking About Moving? These States Have the Lowest Property Taxes". That article reflects a lot of the numbers provided by other sites, and ranks Louisiana as #2 in the country, behind only Alabama.
It's not a new changes either, the Louisiana Tax Haven has existed for a while. In fact, Forbes has regularly named Louisiana as a "Best State for Taxes".
Here's a list of other online sources that rank Louisiana as one of the lowest taxed states in the country:
So with all of these bankers, retirement planners, tax experts, and investors pointing to Louisiana as a Tax-Friendly State, what gives? Why are people inside the state screaming about their taxes when other states are paying three times, or 5 times the amount in taxes?
A few years ago, a video went viral around the state that shed some light on the state's tax issues. It took on the ITEP (Industrial Tax Exemption Program) plan. Where large corporations are able to use Louisiana's roads, natural resources, land, air, and population without contributing to the tax base.
After this video went viral, and the Louisiana population started to understand what ITEP was, former Governor John Bel Edwards signed an executive order that put the ITEP decisions into the hands of local organizations who would be picking up the tax burden for the corporations. After this, former Caddo Parish Sheriff Steve Prator used his new powers to deny picking up the tax burden of a company. He pointed out that the ITEP plan was what was taking funds away from government organizations that were falling behind.
However, Louisiana Governor Jeff Landry reverted the ITEP changes that John Bel Edwards had created, and stripped protections for the state from the program. Putting the state's corporate tax burden back onto local governments and small businesses.