As one would expect, much of the rhetoric in the current election campaigns swirls around the subject of taxes. Since few people enjoy paying taxes, much of that rhetoric is predictably negative, claiming that our taxes are too high. In this regard, it is worth asking how our tax rates compare with those in other states.
Fortunately, there is a personal finance website called WalletHub that makes these comparisons. It has a ranking of states based on the percentage of average personal income that goes to state and local (not federal) taxes. New York is first, with 12.97% of incomes going to taxes. Alaska is 50th, with 5.10% Louisiana ranks smack dab in the middle, 24th. On average, we pay 8.51% of our income in taxes.
But here’s a caveat. The above numbers represent composites of three different kinds of taxes: income tax, property tax, and sales tax. And the picture for Louisiana looks quite different when we look at each of these separately.
On state income tax, we are on the low end, 39th out of 50, with only 1.44% of our income going there. Our property tax ranking is even lower, 44th out of 50, with 2.06% of our income going here. So in these areas we are undertaxed compared to the rest of the nation. But these are offset by our extremely high sales taxes, where we’re 4th highest, consuming 4.99% of our incomes (state and local combined). It is also well known that sales taxes are a regressive form of taxation, taking up a much higher proportion of personal income for the poor than for the rich. According to another study from the Institute for Taxation and Economic Policy entitled “Who Pays?,” the Louisiana taxpayers with the lowest 20% of incomes pay over 9% of that income in sales taxes — almost twice the average of the population as a whole.
Voters may want to keep these figures in mind when evaluating the claims of the candidates regarding taxes.