(The Center Square) — According to the latest Rich States, Poor States report Louisiana’s Economic Outlook rank jumped from 31 to 18. 

“Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs — and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more,” the report writes.

Undoubtedly, the tax reforms made by the Legislature in November worked to move the state up the list. Those reforms included flattening the income tax, reducing the corporate tax rate, expanding the list of taxed goods and services, and eliminating a torrent of tax incentives, exemptions and credits.

The state’s tax reforms earned it the number 14 spot on the indexes “Recently Legislated Tax Changes”, up from number 49.

Jonathan Williams, executive vice president of the American Legislative Exchange Council, previously told The Center Square that Gov. Jeff Landry’s tax proposal closely reflects the ideas behind Donald Trump’s 2017 Tax Cuts and Jobs Act.

“We saw significant economic growth, new investment, and business creation across the country,” Williams said. “In fact, the federal tax code ended up becoming more progressive after the Trump tax cuts than it was before. It’s critical to consider not just the projected short-term impacts, but also the long-term implications for a state’s economic competitiveness.”

The corporate tax changes earned the state the number 10 rank for the indexes “Top Marginal Corporate Income Tax Rate,” up from number 21. 

Louisiana did increase the state sales tax, after the legislature was unable to pass a bill which would have even more expanded taxes on goods and services.

This may have contributed to the state 12-rank increase for the states “Remaining Tax Burden”, which is “calculated as the amount of tax revenues from state and local taxes — excluding personal income, corporate income, property, sales, and severance—per $1,000 of personal income.”

The state also worsened in rank for “Debt Service as a Share of Tax Revenue” and the “Sales Tax Burden.”

Louisiana needs legal reform, not only to address rising insurance costs, but to fix a civil justice system that has become increasingly hostile to businesses and consumers. Louisianans continue to face an untenable insurance crisis and – though a glaring one – this is only one example of an unpredictable civil justice system that fosters excessive litigation, discourages new business and innovations and drives up costs for all of us.

A healthy civil justice system should provide a framework to address wrongs and seek redress for injuries or damages caused by others. Our system in Louisiana has long been out of balance. Litigation has become ingrained in our culture, fostering a “jackpot justice” mentality. Lawsuits are not economic development, but they have become a cottage industry for a handful of big-time trial lawyers who spend tens of millions annually on advertising. A national study recently released by the American Tort Reform Association found that more than $20 million was spent on advertising in Louisiana during the first quarter of 2024, alone. Clearly, these investments are paying off.

“Nuclear verdicts” of $10 million+ are on the rise in Louisiana, keeping us on the Judicial Hellholes® list. Georgia, seeing a similar surge in these excessive verdicts, passed comprehensive legal reforms earlier this year to limit lawsuits and reduce consumer costs, with key provisions including restrictions on attorney fees, regulation of third-party litigation funding, and changes to trial procedures.

In the first quarter of this year, two precedent-setting judgments were handed down in Louisiana. Last month, the first of 41 coastal lawsuits was tried in Plaquemines Parish, resulting in a staggering $745 million damage award. In February, the 19th JDC awarded record damages of over $411 million to one individual in a single case.

If judgments remotely close to these become common, Louisiana will face a parallel crisis: along with current insurance unaffordability, many businesses will have to determine whether they can keep their doors open. New investments are likely to go to less litigious states that provide more predictability, while hardworking Louisianans will feel the effects of these missed opportunities for years to come.

Texas enacted sweeping reforms more than two decades ago, cementing its reputation as one of the top states for business attraction. Florida has also seen tremendous economic benefits through significant legal reforms passed in 2022 and 2023.

With all these successes in neighboring states, enacting comprehensive legal reform in Louisiana should be a clear priority.

Reducing frivolous lawsuits and increasing transparency across our civil justice system are crucial if the goal is putting Louisiana’s families and job creators first. Let’s get it done.

Lana Venable is executive director of the Louisiana Lawsuit Abuse Watch