One of the most controversial proposals that will be debated in the upcoming legislative session will be attempts to increase Louisiana’s homestead exemption for residential property taxes. The only legitimate reason for doing this would be if residential property taxes in the state were out of line. I would like to forward some evidence confirming that is not the case.
The Tax Foundation monitors taxation trends in all 50 states and the District of Columbia. Last fall the foundation publicized 2007 data that presents a pure, apples-to-apples comparison of property taxation among the states and counties in the United States. The comparison is pure because only owner-occupied residences are used in the study-not business or commercial property.
The study clearly illustrates that Louisiana ranks dead last in residential property taxation regardless of how you measure it. When median property taxes paid per home are measured, Louisiana ranks 51st with a tax of $183. The next closest state, Alabama, is almost twice as high at $352.
When it comes to taxes as a percentage of home value, Louisiana again ranks dead last at 0.14 percent of home value-less than half the rate in Alabama. Some may say that Louisiana is a poor state, so you would have to look at property taxes as a percentage of income. Under that criterion, Louisiana again ranks 51st with a rate of 0.35 percent, only half of Alabama’s next lowest percentage of 0.69 percent.
The Tax Foundation study also ranks the 788 counties/parishes in the nation (with a population of 65,000 or more) relative to property taxation. To find the Louisiana parishes, one has to go all the way to the bottom of the list. The first Louisiana parish listed is St. Tammany, an area with one of the highest home values in the state. Even so, St. Tammany ranks 730 in property taxes as a percentage of home value (0.4 percent) and 713 in percentage of income (1.2 percent). The last 6 counties/parishes on the list are all from Louisiana. Twelve of the last 18 come from the Bayou State.
The facts are clear: Louisiana has the lowest residential property taxes in the nation and at the same time leads the nation in the level of homestead exemption. That being the case, why would anyone try to raise the homestead exemption?
It is interesting that most of the efforts to increase the homestead exemption emanate from Jefferson Parish. It is hard to comprehend why the homestead exemption is such an issue in that parish.
According to the Tax Foundation study, Jefferson ranks 766 out of the 788 counties in median property taxes paid per residential household; 776 in property taxes as a percentage of home value; and 770 as a percentage of income. The study lists the median value of a home in Jefferson Parish at $180,000. Interestingly, according to Louisiana Tax Commission data, 80 percent of the residences in Jefferson Parish are covered by the $75,000 homestead exemption and are not subject to property taxes. The vast majority of homeowners in Jefferson Parish make out like bandits, while businesses, renters, and the unfortunate minority of homeowners who do pay taxes have to pick up the slack.
Productive workers aren’t leaving Louisiana because the property taxes are too high. They are leaving because job opportunities are too few. Raising the homestead exemption will not reduce property taxes, it will only transfer them primarily to businesses that are already paying over 80 percent of the burden. Anyone who thinks that will create jobs is foolish. The Legislature and the governor should be looking for real problems to fix. The homestead exemption isn’t one of them.