Louisiana’s population, which is aging faster than the national average, and recent tax decisions are creating a huge financial cliff for the state. JR Ball of the RedEye newsletter explains the silver tsunami barreling down on the Pelican State: 

The population is growing older but not up because three trends are compounding at once, according to LSU Shreveport’s Center for Business and Economic Research (CBER).

  • Louisianans are living longer than they did a generation ago.
  • Birth rates have fallen, mirroring the rest of the country.
  • The state continues to shed working-age residents who’d otherwise offset both.

In 2024, Gov. Jeff Landry and Louisiana lawmakers replaced the state’s progressive income-tax structure with a 3% flat rate, and raised and expanded the state’s sales tax rate. As Ball notes, the new tax code is built for a younger state: 

Louisiana flattened its income tax in late 2024, leaning more heavily on sales tax to cover the gap—both of which shrink as the population ages.

  • The Legislative Fiscal Office projects that individual income tax collections will fall by roughly $1.4 billion per year by 2029.
  • The companion sales tax hike is expected to cover most of that loss, but the bill’s fiscal note never mentions the impact of the state’s aging population.


Investments in early childhood education pay off

In 2022, New Orleans voters approved a 5-mil, 20-year property tax earmarked for early childhood education. A new report from Agenda for Children explains how that local investment, along with matching dollars from the state’s Early Childhood Education Fund (ECEF), led to higher enrollment and improved quality: 

Thanks to significant new investments in the City Seats program, ECEF-funded seats and (Child Care Assistance Program) B-3, enrollment for every age group under age 4 was the highest on record in the 2024-2025 program year. Without those three investments, (New Orleans Early Education Network)  would have served a third fewer children in 2024-2025. … By 2025, 71% of rated programs in NOEEN achieved a score of High Proficient or Excellent.  Additionally, nearly all rated NOEEN programs (99%) achieved at least a Proficient score in 2025.

The report explains what it would take to serve more children:

It would cost $158M to expand the City Seats program to serve all unserved eligible children (0-4) in addition to serving all current City Seats children at the true cost of quality. For $290M, the program could serve all of those children and children whose families earn too much to qualify. Note that not all families want or need care, so actual uptake and costs would likely be lower.

Missouri voters reject tax swap

Memo to Louisiana politicians keen on eliminating the state income tax: More than 80% of Missouri voters recently rejected a proposed constitutional amendment to swap their income tax for increased sales taxes. Amendment 5 would have allowed Missouri lawmakers to raise the state’s sales and use tax to eventually eliminate the state income tax. Sarah Kellogg of St. Louis Public Radio reports: 

Amy Blouin, with the nonpartisan Missouri Budget Project, believes part of Amendment 5’s troubles was the lack of information. “This is the Show-Me State and they did not get shown what the details were, and I think that was a significant part,” Blouin said. “But I also think there were real concerns about the shift from income tax to sales tax and the implications that has for real people.”

The Institute on Taxation and Economic Policy explains how the proposal would have affected Show-Me State families:

A full swap would have cost a typical family up to $535 annually, but the proposal did not specify details of its sales tax hike, instead allowing the legislature to expand and hike the sales tax as they saw fit. The measure lost every county in a decisive rejection of leadership priorities and Gov. Mike Kehoe’s signature proposal 

Recent tax decisions have given Louisiana the highest average combined state and local sales tax rate (10.11%) in the country. 

The rise of “buy now, pay later’ loans

“Buy now, pay later” loans  have exploded in popularity in recent years. While the pay-later services have been traditionally popular for retail purchases, now more people are using them for everyday needs, such as rent, utilities and health care. The New York Times’ Stacy Cowley reports: 

For many borrowers, the loans have become their only option: Half of those using them said they could not make ends meet otherwise, according to the latest edition of a survey that LendingTree, a loan marketplace, has compiled for years. The loans “address the real need that people are short of funds, but just adding fees to their monthly budget and leaving them short next week is not the answer,” said Lauren Saunders, a senior attorney at the National Consumer Law Center.

Some shoppers prefer the short-term repayment periods and fixed fees offered by the pay-later services. But the loans can still become a debt trap:

A quarter of those surveyed by LendingTree who use the loans said they had at times had three or more loans outstanding at once. And because pay-later loans often pull their payments directly from customers’ bank accounts or debit cards, one mistimed withdrawal can set off a cascade of overdraft fees and other missed payments. 

Number of the Day

$40 trillion – The U.S. government’s gross national debt by the end of August. (Source: Washington Post)