(April 13 print edition) In Louisiana, sales taxes are way too high. They need to come down.
By most measures, Louisianans pay the highest sales taxes (state and local combined) in the nation. This matters. Sales taxes at some level may be a necessary evil, but the use of particularly high sales taxes is just plain bad policy.
Yet less than half a year ago, Louisiana lawmakers went in the wrong direction. In the midst of a host of tax reforms and trade-offs, they actually raised state sales tax rates rather than reduced them. The rate now stands at 5 cents to the dollar, while other state tax policy essentially encourages localities also to rely heavily on sales tax for revenue. Most cities in Louisiana have a 10 cents sales tax (combined), and Baton Rouge is at 10.5. That’s awful.
The national median sales tax rate is just 7 cents.
Again, this matters. Sales taxes, even if groceries are exempted, are regressive, meaning they take a higher proportion of poor people’s money than of wealthier people’s. While other, more “progressive” taxes, such as income taxes, somewhat counteract this regressive effect, the regressivity of sales taxes doesn’t fit most people’s definition of fairness. The higher the sales tax, the greater the unfairness.
Unfairness, though, is far from the only reason high sales taxes are bad policy. Like every tax does in one way or another, sales taxes deter productive economic activity. When I served on an official, special citizen’s commission appointed to analyze Mobile, Alabama’s tax system ten years ago, our compilation of copious national research showed sales taxes are marginally more deterrent to economic growth than property taxes, while being clearly more regressive and significantly more volatile.
The latter point means that if the economy takes a downturn — as it very well might, thanks to President Donald Trump’s tariff regime — sales tax collections drop more than property tax collections. For state and local governments looking for revenue stability to provide consistent levels of law enforcement, road maintenance and education, sales taxes are a bad bet…. [The full column is at this link.]
