Editor’s Note: See here for a PDF copy of the letter.
Honorable John Bel Edwards
State of Louisiana
P.O. Box 94004
Baton Rouge, Louisiana 70804
RE: Your Proposals to Increase Louisiana’s Personal Income Tax
Dear Governor Edwards:
I write to ask you to drop your proposals in the second extraordinary legislative session of 2016 to raise Louisiana’s personal income tax.
Increasing our state personal income tax will result in slower growth, both in population and gross domestic product, higher unemployment and less capital investment, the evidence for which is overwhelming based on the experiences of other states.
For example, from 2003 to 2013, the population of the nine states without a state income tax grew an average of 3.7% from domestic in-migration. The population of the nine state with the highest state income tax lost an averge of 2% during the same period. The no-income tax state that grew the most, at 9.1%, was Texas. The high income tax state that lost the most people was New York, at 7.5%. Furthermore, the jobs growth rate was more than double in the no-income tax states than in the high income tax states (9.9% versus 4.3%). Source: The Heritage Foundation (May 5, 2015). See also “Taxation and International Migration: Do High Taxes Cause Brain Drain?” Tax Foundation (Nov. 2, 2015).
I realize Americans move for a variety of reasons: climate, job opportunities, family, quality of life and education. Taxes are a reason, too. Aside from many studies indicatin that, our own life experiences confirm that taxes influence where people live and work. We both know Louisiana residents who are living in Texas and Florida because those states have no state income tax. And we also know many people who work in Washington, D.C. but choose to live in northern Virginia, in part because of lower income taxes.
Not only do people move because of taxes, but so does money. From 2000 to 2010, $45.6 billion in personal income left New York, a high income tax state. During that same period, Florida (a no-income tax state) gained $467.3 billion in personal income ($13.3 billion from New York alone), Arizona (ditto) gained $17.7 billion and Texas (ditto) $17.6 billion. Was it the weather? Maybe. But after Florida, New Jersey ($8.6 billion) and Connecticut ($4.2 billion) were the second and third largest recipients of New York personal income. Both New Jersey and Connecticut are high income tax states, but lower than New York. Source: The Tax Foundation (Aug. 19, 2013); “How State Income Taxes May Be Redrawing the Population Map,” by Teresa Ambord, Accounting Web *(aug. 27, 2013).
Yet another study proves the point. For many years the Internal Revenue Service has been tracking the migration of Americans and their income across state and county lines, on which the IRS reports annually. Based on IRS data filed from 1995 to 2010, the nine states that have no state income tax gained $146.2 billion in adjusted gross income. The nine states with the highest income tax lost $107.4 billion. Source: “How Money Walks” by Travis H. Brown (Jan. 14, 2013).
Please reconsider your plans to raise Louisiana’s personal income tax.