Perhaps it is no surprise to Louisiana business owners that the Bayou State is not “Heaven” when it comes to operating a business. The report by the Tax Foundation just added salt in the wound by ranking the state lower for 2018 than 2017.
Now Louisiana is number 42 versus 41 when it comes to a favorable tax climate for operating a business.
The Tax Foundation’s State Business Tax Climate index is designed to enable business leaders, government policymakers, and taxpayers to gauge how their states compare.
The Tax Foundation overall ranking is based on five components, with different percent rankings. These are:
Individual income tax-33.0%
Unemployment insurance tax-9.6%
The ten best states in the index for 2018 are, in order, Wyoming, South Dakota, Alaska, Florida, Nevada, New Hampshire, Utah, Indiana and Oregon.
The ten lowest ranked, or worst, states are Rhode Island, Louisiana, Maryland, Connecticut, Ohio, Minnesota, Vermont, California, New York and New Jersey.
Once again, Louisiana holds the distinction of being worst in the nation for sales taxes.
In other categories, our state is No. 27 for corporate taxes, No. 29 for individual taxes, and No. 30 in property taxes.
The only good news in the index is the No. 4 ranking for unemployment taxes. The 2017 ranking was NO. 9; this is the only category to which the state showed improvement.
The report is careful to delineate its purpose and how its rankings should be utilized. Specifically this index is an “indicator of which state’s tax systems are the most hospitable to business and economic growth.”
The Tax Foundation’s information is not determinative on the best states in which to live.
It does not purport to measure economic opportunity, or even the broad business climate. It does not include crime rates, health care or public education in it’s review nor does it gauge or rank the relative cost of living.
The Tax Foundation report advises that states with the best tax systems will be the most competitive at attracting new businesses, and most effective in generating economic and employment growth. The report acknowledges that taxes are only one factor in business decision-making and that other concerns like access to raw materials , infrastructure and a skilled labor pool are or can be more important.
However, it is noted that unlike changes to a state’s health-care, transportation, or education systems which can take decades to implement and/or change, changes to tax codes have immediate impact.
And the report did not, unfortunately, include insurance and estate taxes in the calculations. Louisiana does not tax estates before distribution of assets. Nor does it tax the actual inheritances.
What is undeniable by any skeptics of the Foundation’s index is the fact that taxes paid by businesses are ultimately born by individuals through lower wages, increased prices, and decreased shareholder value. And in some instances, less opportunities by both wage earners and consumers alike as far as the number of businesses in the state.
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