In an effort to combat a dramatic decline in population, the state of Louisiana has come up with a plan: simplify the tax code.

Gov. Jeff Landry (R) concluded his special session on tax reform in December 2024 by signing six bills into law, and three of them, authored by Rep. Julie Emerson, aimed to do just that. Emerson wrote a bill to repeal the corporate franchise tax (HB3), a bill to enact a flat 5.5 percent corporate income tax (HB2) and a proposed amendment to the state constitution to simplify state taxation for individuals and businesses (HB7).

“We need to keep Louisianans in Louisiana by attracting new businesses and industry, and creating jobs,” Emerson told me in an interview.

These bills, along with legislation to create a 3 percent flat personal income tax (HB10) are only the beginning to making Louisiana competitive among its southern neighbors.

Louisiana voters will have a chance to weigh in on this important issue in an upcoming vote on March 29. If passed, Amendment No. 2 will help transform Louisiana’s taxation system into a desperately needed business-friendly, simplified collection system.

Over the last few years, the state has lost 84,000 residents — the largest drop since the fallout of Hurricane Katrina, which ultimately led to a lost Congressional seat and electoral college vote in 2010. This decline is even more striking when you realize that since 2020, the rest of the South has been growing faster than any other part of the country.

While the population in states like Florida, Texas, and Tennessee is booming, Louisiana not only fails to attract newcomers, but is losing many native Louisianans who are choosing to leave. A declining population means fewer customers for businesses, and struggling businesses means fewer jobs. In turn, that means less tax revenue, which means schools suffer — and the economic and social impacts go on and on.

Perhaps the best encapsulation of these many challenges is a recent Archbridge Institute report on ranked Louisiana dead last on social mobility compared to all other 50 states. The report measures the presence of opportunities and other environmental factors that help individuals achieve their definition of success. More than just economic mobility, ArchBridge takes a holistic approach to understanding social mobility and includes measurements in areas such as entrepreneurship, rule of law, education, and social capital.

Emersion is all too aware of Louisiana’s reputation. A State Representative since 2015 and Chair of the House Ways and Means Committee, she says she’s tired of watching businesses decide against Louisiana and choose instead to bring jobs to other states. To fix this problem, she started deliberately seeking out answers. When she asked business leaders directly why they chose other states over Louisiana, many said the same thing: Louisiana’s tax system is just too difficult to navigate compared to similar states.

With the right mix of leadership, energy, and willpower in place at the Louisiana Capital, Emerson seized the opportunity to pass significant reforms to Louisiana’s tax system.

“Tax reform is hard to do,” she told me. “Nobody likes doing tax reform. At the end of the day, even lower taxes still means the government is taking your money.”

The ultimate goal, she said, is to ensure Louisianans are able to keep most of their money, and to lower the tax burden and regulatory barriers so that new industry is able to take root in the state. “The Louisiana government needs to get out of the way and let business leaders and communities take the lead,” said Emerson.

Louisiana business owner Garrett Monti agrees with Emerson, but says the state has a long way to go. “What the legislature was able to pass is a good first step, but it won’t fix everything,” he said. With 21 years of experience at a second generation owned business, Quality Cleaning Equipment & Supply, Monti knows a thing or two about the unique challenges of running a business in Louisiana.

“It’s like death by paper cuts,” he said. “One particular regulation or fee isn’t so bad, but the whole ball of wax makes doing business in Louisiana costly.” Quality Cleaning Equipment & Supply, located in Luling, LA, offers services from chemicals to machinery all across the southern region. Regularly doing business from Texas to Florida, Monti is keenly aware of how far behind Louisiana is compared to the rest of the South.

But it’s not just the literal costs Monti is referring to. Having a larger population means more customers, and staying in Louisiana means watching customers disappear. “You really have to commit to making your business work in Louisiana,” said Monti. “Even still, to be successful here, you always have to keep an eye out for opportunities out of state.”

“The greater Houston area isn’t that far away and has roughly the same population as all of Louisiana,” said Monti. “But the appeal of Texas is that it has a combination of the right policy, population, and wealth to help a business grow.”

Additionally, Louisiana’s decentralized taxation system across 64 parishes creates a lot of extra work for business owners. “You are paying different rates, different bases, different collectors — all of which are subject to audits in different places by different sheriffs,” said Daniel Espamer, CEO of the Pelican Institute. “It is incredibly complex and expensive to comply.”

This is a particular problem for mid-sized businesses operating in more than one parish. “Bigger businesses can afford to have a compliance operation team,” said Espamer, “but smaller businesses likely can’t.” And that puts local Louisiana business owners at a real disadvantage.

Monti agrees. “In Texas, I filed one tax return. In Florida, too, one tax return for the whole state. Not even automated filing helps when each filing costs $50. That cost starts to really add up!”

Since the most recent tax reforms were signed, there’s already been a significant boost to new industry coming to Louisiana compared to the last 10 years, according to Espramer. In the last six months alone, Meta announced plans to build a $10 billion data center near Monroe, LA. Another data center has been announced in West Feliciana Parish. And a multibillion dollar Hyundai steel plant is coming to Ascension Parish. All three have stated that reforms promising a friendlier tax climate factored heavily into decisions to build in Louisiana.

But really transforming Louisiana will take more than pulling in a few opportunities with big businesses that primarily operate out of state. To get Louisiana on the right track, government, businesses, and communities will have to recommit to making the state viable. “Louisiana business owners are here because we want to be here,” said Monti, “and I’m hopeful that current leadership is strong and determined to turn things around for, not just Meta, but for loyal small to medium businesses, too. This could be our last shot.”

“I’d love to cut taxes completely to maximize Louisianans’ incomes, but the reality is that the government costs money,” said Emerson. “You can’t have a government that runs on nothing.” According to Emerson, next steps in tax reform include trimming down the state budget to keep taxes low, ending tax credits that don’t ultimately invest in local Louisiana business growth, like the movie tax credit, and getting the income tax down from 3 percent to 0 percent in the coming years.

There’s still a lot of work to be done, but hopefully Louisiana will continue to move towards a tax policy foundation that invests in the local economy and builds a brighter future. In a time of political polarization and back and forth, where policies are undone by subsequent terms, Louisiana businesses and citizens will have to be the ones to keep pushing for better policies.

When asked about the upcoming vote on Amendment No. 2 to continue simplification of the state’s tax system, Monti was cautiously optimistic. “The time is now,” said Monti, “I’m under no delusion that we can fix 100 years of bad policy in one special session. I really hope we can keep the momentum going.”