If Louisiana Wants to Compete, the Income Tax Has to Go

Louisiana has spent years trying to compete with the rest of the South — and falling short. People are leaving, businesses are hesitant, and too often, policymakers have answered by tweaking around the edges instead of fixing the core problem.

But something has started to change.

Under Governor Landry's leadership, Louisiana finally took a meaningful step forward by simplifying its tax code and moving to a flat 3 percent income tax — now the lowest in the South and among the lowest in the country among states that still levy one.

That reform matters. It puts more money back in people’s pockets, makes the system easier to understand, and signals that Louisiana is at least beginning to take competitiveness seriously.

The problem is that “beginning” isn’t enough.

If Louisiana actually wants to compete with the states that are winning — not just improve its standing slightly — then the next step is clear: we should eliminate the income tax entirely.

That’s not some radical idea. It’s exactly what many of our competitors have already done.

Texas, Florida, and Tennessee don’t tax income at all. They’ve built economic models around growth, in-migration, and investment, and the results show.

Over the past decade, those states haven’t just grown — they’ve dominated. Florida and Texas alone gained well over a million new residents each from other states, while high-tax states lost millions of people over the same period. More recently, Florida gained more than $20 billion in income from people moving in, while states like California and New York lost billions as residents left.

Those states continue to attract people, capital, and opportunity at a pace Louisiana simply hasn’t matched. Meanwhile, Louisiana still ranks near the bottom in economic competitiveness and has struggled with population loss for years.

That’s not a coincidence. It’s a policy choice.

Economist Arthur Laffer has spent decades explaining why this happens. His core insight is simple: tax policy changes behavior. When you tax something more, you get less of it. When you tax it less, you get more.

At the state level, that plays out in a very real way. Workers choose where to live. Businesses choose where to invest. Capital flows to the places where it is treated best.

And over time, those decisions compound.

States that reduce the tax burden on income tend to attract more of it. States that increase it tend to watch it leave. That’s not theory — it’s the pattern we’ve seen play out across the country for years.

Income taxes sit right at the center of that dynamic. Unlike other forms of taxation, they directly target productivity. The more someone works, earns, or builds, the more they pay. Over time, that creates a powerful incentive to do those things somewhere else.

People move. Businesses relocate. Investment flows elsewhere.

And in a region like the South — where states are actively competing for the same jobs and industries — even small differences in tax structure can tip the scales.

Louisiana’s recent reforms prove something important: change is possible. Lawmakers flattened the tax, increased deductions, and delivered meaningful relief to working families. The typical family is already seeing real savings as a result.

That momentum shouldn’t stop at 3 percent.

Other states are already thinking longer-term. Mississippi, for example, has adopted a phased approach to reducing and ultimately eliminating its income tax, giving businesses and families clarity about where the state is headed.

That kind of direction matters just as much as the current rate. When employers are deciding where to expand or relocate, they’re not just looking at today — they’re looking at where a state will be five or ten years from now.

Right now, Louisiana doesn’t have that roadmap.

Governor Jeff Landry deserves huge credit for getting the state moving in the right direction. He did what other Governors couldn't do or flat-out refused to act on.

His push to simplify the tax code and lower rates was long overdue, and it has already begun to shift the conversation toward growth instead of stagnation.

But he’s also made it clear that the current system is outdated and holding Louisiana back.

His next step is to build a clear, phased path to eliminating the income tax altogether.

That doesn’t happen overnight, and it shouldn’t. It requires discipline, controlling spending, broadening the tax base when necessary, and making smart, long-term decisions rather than short-term political ones.

But the principle is straightforward. When you reduce the tax burden on work and investment, you don’t just change what government collects — you increase the amount of economic activity taking place in the first place.

And states that embrace that reality don’t just reform. They grow.

Louisiana has the assets to do the same. We have the energy sector, the ports, the industrial base, and the workforce. What we’ve lacked is a policy environment that fully supports growth instead of quietly working against it.

An income tax does exactly that. It tells workers, entrepreneurs, and investors that success will be taxed more heavily here than elsewhere.

Eliminating it would send the opposite message — that Louisiana is serious about competing, serious about growth, and serious about keeping the people and businesses that too often leave.

For years, Louisiana has been trying to fix its economy around the margins. Lowering the income tax to 3 percent was a strong step, but it should be seen for what it is: a starting point, not the finish line.

If we want to stop losing and start winning, the path forward is clear.

Finish the job.