Study finds Louisiana has the nation’s highest local taxes

Though the sales tax rate in Louisiana is the second-lowest in the U.S., a new study by the Tax Foundation shows that Louisiana’s combined state and local sales taxes are the third-highest in the nation, averaging 8.84%. Additionally, Louisiana has the highest average local sales tax rate at 4.84%. “The proliferation of local jurisdictions levying their own sales taxes can have an enormous impact on a state’s overall tax structure,” says Tax Foundation analyst Scott Drenkard. The study contradicts the commonly held belief that states with low statewide sales tax rates often have lower total sales taxes, according to The Pelican Institute, a nonpartisan research and educational organization. At 4%, Louisiana has the second-lowest statewide sales tax rate in the U.S., but the higher average local sales tax rate pushes Louisiana to the third-highest combined rate in the country. Conversely, California has the highest state tax rate in the country, but only ranks 12th for combined state and local taxes because of its low local average tax rate. According to Drenkard, local option sales taxes often cause consumers to pay far more for their goods and, according to the study, can more than double the average sales tax paid by consumers. The lowest combined sales tax rates in the country were recorded in Delaware, Montana, New Hampshire and Oregon, all of which do not levy state sales taxes or allow local sales taxes. In all, five states don’t have statewide sales taxes, and 14 don’t have local sales taxes. Nationwide, total sales tax revenue dropped 30% in most states between 2007 and 2010. See how Louisiana stacked up against all states in the study’s rankings report here.