States with the Best & Worst Taxpayer ROI
There is an obvious disconnect in the minds of taxpayers between the amount we fork over each April and what we ultimately receive from the government in return. Tax Day is a tangible, painful reminder of our investments in federal, state and local governments, but it’s difficult to discern the government’s precise role in our day-to-day quality of life and overall pursuit of happiness. Perhaps that’s why 52% of people feel they pay too much in taxes and most people think roughly half of their tax dollars are being wasted.
One thing we do know is that taxpayer return on investment varies significantly based on simple geography. Federal income tax rates are uniform across the country, yet some states get far more federal funding than others – as WalletHub recently illustrated in its Federal Government Dependency Report. But federal taxes and funding are only part of the story.
Ideological differences regarding the role of local taxation have resulted in citizens of each state shouldering dramatically different tax burdens. This, of course, begs the question of whether people in high-tax states benefit from correspondingly superior government services or if low-tax states are more efficient. 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 rates to the quality of the services that are funded at those levels, which we separated into six main categories – Infrastructure, Education, Health, Safety, Economy and Pollution – that collectively consist of 27 metrics. You can read more about our methodology as well as review our complete findings below.
Tax Rate Rank
Overall Government Services Rank
|48||District of Columbia||37||44|
Detailed Breakdown by State
Overall Gov Services Rank
|44||District of Columbia||34||38||48||27||29||50|
Ask The Experts: Turning Taxes Into an Investment
- What's the correlation between state taxes and the government services?
- How do you think people prioritize various gov. services?
- How can state and local governments use tax revenue more efficiently?
WalletHub sought to determine where taxpayers get the best and worst return on their investment by examining state and local tax payments through the prism of the services that are funded at those levels.
We divided those services into six main categories – Infrastructure, Education, Health, Safety, Economy and Pollution – and evaluated 27 total sub-metrics designed to gauge the quality and efficiency of government operations in each area. We then compared each state’s Average Government Service Ranking to its ranking from our recent report on the States with the Highest & Lowest Tax Rates, ultimately arriving at a clear ROI hierarchy for taxpayers across the 50 states and the District of Columbia.
Each overall category was given equal weight in this analysis. The following is a breakdown of the specific metrics that we used as well as the weights we assigned to each.
Infrastructure = 1
- Quality of Roads & Bridges: 0.4
- Public Transportation Usage Percentage: 0.2
- Average Commute Time: 0.2
- Park & Recreation Expenses Per Capita: 0.1
- Walkability: 0.1
Education = 1
- State K-12 Public School Rank: 0.3
- State University System Rank: 0.4
- Public HS Graduation Rate: 0.3
Health = 1
- Number of State and Local Hospitals per 100,000 Inhabitants: 0.2
- Public Hospital System Rank: 0.2
- Average Life Expectancy: 0.2
- Infant Mortality Rate Per 1,000 Live Births: 0.2
- Out-of-Pocket Medical Expenses: 0.1
- Average Health Insurance Premium: 0.1
Safety = 1
- Violent Crime Rate per 100,000 Inhabitants: 0.3
- Fatalities per 100 Million Vehicle Miles of Travel: 0.3
- Number of “Under the Influence” Traffic Violations per 100,000 Inhabitants: 0.2
- Sex Offenders per 100,000 Inhabitants: 0.1
- Youth Incarceration Rate per 100,000 Inhabitants: 0.1
Pollution = 1
- Water Quality: 0.5
- Air Pollution: 0.5
Economy = 1
- Unemployment Rate: 0.3
- Average Income/ Cost of Living: 0.3
- Annual Rate of Job Growth, Adjusted for Population Growth: 0.1
- Home Price Volatility: 0.1
- Percentage of Residents Living Below the Poverty Line: 0.1
- Economic Mobility Rank: 0.1
Sources: The data used to compile this report is courtesy of the U.S. Census Bureau, U.S. Bureau of Labor Statistics, National Center for Education Statistics, U.S. News & World Report, TRIP, Environmental Working Group, America's Health Rankings, FBI, Annie E. Casey Foundation, Parents for Megan’s Law and the Crime Victims Center, National Highway Traffic Safety Administration, Medicare.gov, Manhattan Institute, Families USA, Social Science Research Council, Centers for Disease Control and Prevention, Missouri Economic Research & Information Center, The Equality of Opportunity Project, and WalletHub research.