This post was written by Connor Balough

 

Tax Day can be a painful reminder of our large investment in the operation of federal, state and local governments, though many of us are unaware of their precise roles in everyday life. As a result, this creates a disconnect in the minds of taxpayers between the amount of money we should fork over every April and how much we ultimately deserve in return from our government.

Perhaps that’s why nearly three out of five U.S. adults feel they pay too much in taxes and why Americans estimate that Uncle Sam wastes slightly more than half of every tax dollar — higher than what they approximate state and local governments squander. We do know, however, that taxpayer return on investment, or ROI, varies significantly based on simple geography. Federal income-tax rates are uniform across the nation, yet some states receive far more federal funding than others. But federal taxes and support are only part of the story.

Ideological differences regarding the role of local taxation have resulted in dramatically different tax burdens. This begs the question of whether people in high-tax states benefit from expectedly superior government services or if low-tax states are more efficient or receive correspondingly low-quality services. In short, where do taxpayers get the most and least bang for their buck?

WalletHub sought to answer that question by contrasting state and local tax collections with the quality of the services residents receive in each of the 50 states within five categories: Education, Health, Safety, Economy, and Infrastructure & Pollution. Our data set includes a total of 23 key metrics. Read on for our findings, methodology and commentary from a panel of experts.

Source: WalletHub
‘Taxpayer ROI’ Rank State ‘Total Taxes Paid per Capita’ Rank* ‘Overall Government Services’ Rank
1 New Hampshire 2 5
2 South Dakota 9 16
3 Florida 3 34
4 Virginia 15 8
5 Alaska 1 50
6 Colorado 14 11
7 Utah 18 10
8 Missouri 5 37
9 Texas 12 28
10 Nebraska 28 4
11 Georgia 8 39
12 Idaho 19 18
13 Iowa 36 3
14 Arizona 11 38
15 Wisconsin 35 6
16 Tennessee 4 42
17 South Carolina 6 41
18 Kansas 29 13
19 Ohio 13 27
20 Indiana 22 20
21 Alabama 7 45
22 Maine 31 14
23 Kentucky 20 26
24 Michigan 24 24
25 Pennsylvania 26 22
26 North Carolina 17 36
27 Washington 34 21
28 Rhode Island 33 23
29 Oregon 21 33
30 Illinois 37 19
31 Montana 27 30
32 Oklahoma 16 40
33 New Jersey 40 12
34 Louisiana 10 48
35 Minnesota 47 1
36 Maryland 39 25
37 Massachusetts 43 15
38 Connecticut 46 7
39 Mississippi 23 46
40 West Virginia 30 43
41 Vermont 49 2
42 Nevada 25 47
43 Wyoming 45 17
44 Delaware 41 29
45 Arkansas 38 44
46 New York 42 31
47 California 44 32
48 New Mexico 32 49
49 Hawaii 48 35
50 North Dakota 50 9

*“Per Capita” includes the population aged 18 and older.

Artwork-2017-Taxpayer ROI report v2

 

Source: WalletHub

Red States vs. Blue States

2017-Taxpayer-ROI-Blue-vs-Red-Image

 

Detailed Breakdown by State

Overall Gov’t. Services Rank State Total Score ‘Education’ Rank ‘Health’ Rank ‘Safety’ Rank ‘Economy’ Rank ‘Infrastructure & Pollution’ Rank
1 Minnesota 75.70 6 1 8 2 4
2 Vermont 68.44 3 30 1 27 12
3 Iowa 68.17 5 3 13 7 17
4 Nebraska 67.45 11 6 18 3 5
5 New Hampshire 67.04 7 8 3 8 41
6 Wisconsin 66.31 1 25 11 10 28
7 Connecticut 66.24 2 11 5 26 37
8 Virginia 65.52 9 18 7 12 30
9 North Dakota 64.74 34 10 14 5 2
10 Utah 64.19 26 5 16 1 26
11 Colorado 61.65 27 9 24 4 9
12 New Jersey 61.48 8 31 4 13 47
13 Kansas 61.11 18 4 35 9 6
14 Maine 60.82 21 22 2 42 20
15 Massachusetts 60.40 13 13 10 18 45
16 South Dakota 59.56 45 2 32 15 1
17 Wyoming 59.35 38 37 21 6 3
18 Idaho 58.82 40 19 9 14 11
19 Illinois 57.80 19 20 19 23 36
20 Indiana 57.72 10 35 27 16 22
21 Washington 56.38 23 23 25 22 24
22 Pennsylvania 56.06 14 14 17 28 48
23 Rhode Island 55.66 32 17 6 31 46
24 Michigan 55.49 31 28 22 17 25
25 Maryland 54.53 12 15 26 20 49
26 Kentucky 54.36 20 33 20 35 27
27 Ohio 53.30 30 36 15 25 32
28 Texas 53.28 16 27 41 11 38
29 Delaware 52.42 4 49 42 19 33
30 Montana 51.70 39 21 36 29 7
31 New York 50.93 22 32 12 36 50
32 California 50.90 29 16 29 38 43
33 Oregon 50.02 41 24 23 32 39
34 Florida 49.96 17 34 39 41 21
35 Hawaii 49.32 42 7 31 37 42
36 North Carolina 49.25 24 48 30 40 19
37 Missouri 49.03 37 29 38 24 35
38 Arizona 48.68 43 12 37 43 18
39 Georgia 48.54 15 45 33 33 40
40 Oklahoma 46.32 28 41 40 21 44
41 South Carolina 44.28 25 39 47 45 10
42 Tennessee 43.80 36 40 46 30 15
43 West Virginia 43.07 44 44 28 48 23
44 Arkansas 42.78 33 42 44 44 16
45 Alabama 42.02 35 46 43 47 31
46 Mississippi 39.92 46 43 34 49 29
47 Nevada 39.34 48 38 45 39 13
48 Louisiana 36.05 47 47 48 46 14
49 New Mexico 34.94 50 26 50 50 8
50 Alaska 31.71 49 50 49 34 34

Ask the Experts: Turning Taxes Into an Investment

For more insight into how taxpayer funds are ultimately turned into government services as well as how taxpayers can measure the efficiency with which their money is used, we turned to a panel of economics and public-policy experts. You can check out their bios and responses to the following questions below.

  1. Do states with high tax burdens provide better government services?
  2. How can state and local governments use tax revenue more efficiently?
  3. How can average citizens assess the ROI of their local tax dollars?
  4. What’s the most common way local governments waste taxpayer dollars?

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