The Simple Recipe for Abolishing a State Income Tax by Dan Mitchell

The good news is that Louisiana voters recently voted to lower their state’s top income tax rate.

The bad news is that Louisiana’s economic policy still leaves much to be desired.

• Ranked #40 by the Tax Foundation.
• Ranked #26 by the Fraser Institute.
• Ranked #30 by the Cato Institute.

But there are signs of hope.

There’s a new governor, Jeff Landry, and that may mean a better approach.

In an article for the New Orleans newspaper, Tyler Bridges writes that the new governor’s transition team wants to eliminate Louisiana’s income tax.

Both the personal tax and corporate tax. Here are some excerpts from the article.

Gov. Jeff Landry and state legislators ought to begin phasing out corporate and personal income taxes. That’s the recommendation of the governor’s transition committee on economic development and fiscal policy… The committee provides no plan for how to offset the huge hit to the state treasury… Ditching the income tax has been a conservative rallying cry for years… The transition committee’s report blames Louisiana’s “antiquated” and “complex” tax system for stymieing investment and job creation. “While our total tax burden is competitive with our neighbors, our tax structure is not, ranking 40th in the latest Tax Foundation rankings,” the report said, “…We must look to other southern states and identify where they get it right and where we get it wrong.”

If they want to know how to get it right, they can look next door at Texas. The Lone Star State does just fine without an income tax.

But an even better option is Florida, which also has no income tax. But, even more important, Florida has a much lower burden of spending that Louisiana.

According to Census Bureau data (albeit from a few years ago), government in Florida spends more than $2,000 less per capita than government in Louisiana.

Is Louisiana getting better results for all that money?

Of course not.

So the simple recipe to make Louisiana’s dream a reality is to impose a spending cap. Sort of like TABOR in Colorado.

P.S. Louisiana does have a good rule for political corruption.