Is Louisiana Really the ‘Most Taxed’ State in the Country?
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 it's 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.
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 effective property tax rate is 1.76%, while in Michigan it's 1.62%, and in Louisiana its 0.18%. Those numbers would actually make Louisiana the lowest in the country for property tax. According to The Balance (a site for investing, retirement planning, and banking, with zero political agenda in Louisiana, who is marketing the state to outside residents and using the tax rate as a plus), Louisiana is "the next best thing to a state with no property tax."
But that's just one site, they might not have their facts in order. So I jumped over to another 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 "The median property taxes on a home in Louisiana are $714 on a median home value of $140,300" and 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-Friendly 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 are leaving the state, outside sources--especially in the personal finance world--are pointing at low taxes as a reason people should move here.
The site GoBankingRates.com even put out an article titled "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 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 video went viral around the state last year that might have some insight.
Could Louisiana be both Tax-Friendly and taxed too high? What if there was a large group that was experiencing the best tax rates in the country, while another group was having to pick up the tab?