White households in Louisiana pay the lowest combined tax rate in the state, while Black households pay the highest. That’s according to a new policy chart book from the Louisiana Budget Project, using data from the Institute on Taxation and Economic Policy. Louisiana’s upside-down tax structure makes it more difficult for people and communities of color to build income and wealth over time.
“Years of policy advantage and privilege, like Louisiana’s regressive tax structure, have led to a significant overconcentration of white families among the state’s top earners, while historical and current racism have done the opposite for Black, American Indian, and Hispanic households,” said Stacey Roussel, policy director for the Louisiana Budget Project and author of the chart book. “That’s why the bottom 80% of Louisiana taxpayers is a more diverse group than the top 20%.”
Different types of taxes have different impacts by race and ethnicity. For example, Louisiana’s regressive sales taxes serve to worsen disparities, as Black households pay an average effective sales tax rate that is 33% higher than for whites. The Pelican State is also one of only three states that lets people and corporations deduct all their federal income taxes on state returns. The wealthiest 20% of Louisiana taxpayers reap 86% of the benefits of this costly tax break.
Correcting disparities in income by race and ethnicity requires a more progressive system with higher tax rates on affluent residents and comparatively less reliance on the tax dollars paid by lower- and middle-income families. Click here to read LBP’s recommendations.