Columbus, OH – New research conducted by economists at The Buckeye Institute’s Economic Research Center (ERC) found that tax increases being considered by policymakers in Louisiana would lead to a loss of jobs and a decline in the state’s economy.
Partnering with Louisiana’s Pelican Institute, the state’s premier voice for free markets, Buckeye’s ERC staff used a dynamic scoring model, developed by Buckeye economists, to show the impacts of four tax raising scenarios currently under consideration by the Louisiana legislature.
- Increasing the state sales tax by a quarter-penny. This would lead to a net loss of 1,400 jobs and a decrease in the state’s gross domestic product (GDP) by $86 million in the first year alone.
- Increasing the state sales tax by a half-penny. This would double the impacts of the quarter-penny increase and bring job losses to 2,800 and decrease GDP by $173 million.
- Compressing personal income tax brackets. This would cause a first-year net loss of 2,600 jobs and decrease GDP by $191 million.
- Reducing individual income tax deductions. This would lead to the net loss of 700 jobs and reduce the state’s GDP by $56 million, while raising $56 million in new tax revenue.
“This research was compiled using a dynamic scoring model, which better reflects the reactions of people and businesses to government policies,” said Dr. Andrew Kidd, the senior economist at The Buckeye Institute’s Economic Research Center. “This model presents a more meaningful estimate of how government tax, spending, and regulatory policies affect real-life decisions made by Louisianans every day and how those decisions impact the larger economy.”
Economists with The Buckeye Institute’s Economic Research Center developed the dynamic scoring model, which predicts the effects changes in taxing and spending will have on economic growth, jobs creation or loss, and revenue. Buckeye’s model is in keeping with current economic practices at the federal level, which uses dynamic analysis and dynamic scoring to analyze major federal tax policy proposals. This modeling simulates changes in the economy that result from changes in tax policy and shows how those changes impact tax revenues.
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