States with the Best & Worst Taxpayer ROI

Tax Day can be a painful reminder of how much we have to invest in federal, state and local governments, though many of us are unaware of exactly what they give us in return. 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 deserve in return.

Perhaps that’s why, according to WalletHub’s Taxpayer Survey, 55% of U.S. adults feel they pay too much in taxes and why 90% don’t think that the government uses tax revenue wisely. We do know, however, that taxpayer return on investment, or ROI, varies based where one lives. 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.

Different states have dramatically different tax burdens. This begs the question of whether people in high-tax states receive superior government services. Likewise, are low-tax states more efficient or do they receive low-quality services? In short, where do taxpayers get the most and least bang for their buck?

WalletHub aimed 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 30 key metrics. Read on for our findings, methodology and commentary from a panel of experts.

Main Findings

 

State and Local Taxes Paid vs. Spending Received by State

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

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

 

 

Red States vs. Blue States

 

Detailed Breakdown by State

Overall Gov’t. Services Rank (1=Best)	State	Total Score	‘Education’ Rank	‘Health’ Rank	‘Safety’ Rank	‘Economy’ Rank	‘Infrastructure & Pollution’ Rank
1	Minnesota	77.86	2	1	7	2	2
2	Vermont	69.78	4	6	1	36	6
3	North Dakota	67.41	23	8	17	6	1
4	Massachusetts	66.54	10	2	9	12	31
5	Wisconsin	66.05	1	24	14	11	27
6	Connecticut	65.90	5	5	8	28	23
7	New Hampshire	65.46	24	3	4	9	33
8	Virginia	65.29	15	28	6	7	8
9	Iowa	64.49	14	10	19	4	9
10	Wyoming	62.73	22	37	10	17	3
11	Utah	62.30	21	16	13	1	39
12	Rhode Island	62.16	17	7	3	34	34
13	Nebraska	62.04	18	15	18	5	11
14	New Jersey	61.94	8	23	5	8	50
15	Maine	61.05	27	13	2	41	25
16	Colorado	59.02	33	4	30	3	20
17	South Dakota	58.80	40	11	29	15	4
18	New York	58.43	6	14	11	46	36
19	Washington	57.98	7	17	22	22	45
20	Indiana	57.24	13	32	24	21	10
21	Maryland	56.72	3	19	33	16	47
22	Hawaii	56.24	37	9	20	14	37
23	Idaho	55.83	41	26	12	13	24
24	Delaware	55.49	11	40	35	35	5
25	Illinois	55.18	20	25	25	31	17
26	Ohio	54.84	29	22	16	30	38
27	Michigan	54.74	28	21	27	20	26
28	Kansas	54.50	36	12	38	10	15
29	Pennsylvania	53.40	38	20	15	32	41
30	Kentucky	52.21	32	34	21	42	19
31	California	52.10	12	18	34	39	48
32	Montana	52.09	31	27	36	26	16
33	Florida	51.24	9	36	37	38	35
34	Georgia	51.20	26	41	32	24	7
35	North Carolina	51.08	19	48	28	29	13
36	Oregon	50.23	42	29	26	23	29
37	Missouri	47.48	25	35	42	19	43
38	Texas	47.06	34	31	39	18	49
39	Oklahoma	46.26	16	49	40	25	44
40	Tennessee	43.45	35	42	45	27	18
41	West Virginia	43.20	46	38	23	49	30
42	Arkansas	42.06	30	44	46	43	21
43	Nevada	41.23	45	39	41	33	32
44	Arizona	40.58	43	33	43	40	42
45	South Carolina	40.17	39	43	47	37	22
46	Mississippi	39.20	49	50	31	47	40
47	Alabama	37.71	47	46	44	44	28
48	New Mexico	36.29	48	30	50	50	14
49	Alaska	34.79	50	47	49	45	12
50	Louisiana	32.98	44	45	48	48	46

 

Ask the Experts: Turning Taxes Into an Investment

For more insight into how taxpayer funds are 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?

Methodology

In order to determine which states yield the best and worst return on investment (ROI) for taxpayers, WalletHub compared the quality of government services received by residents to the total state and local taxes they pay in each of the 50 states.

First, we analyzed each state across five key government-service categories: 1) Education, 2) Health, 3) Safety, 4) Economy and 5) Infrastructure & Pollution. The categories were further broken down into 30 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the best quality of government service.

We then determined each state’s weighted average across all 30 metrics to calculate its “Overall Government Services Score.”

Finally, we constructed the Taxpayer ROI ranking by comparing each state’s “Overall Government Services Score” to its “Total Taxes Paid per Capita.” “Per Capita” includes the population aged 18 and older.

Education – Total Points: 20

• Quality of Public University System: Double Weight (~5.71 Points)
  Note: Based on data from WalletHub’s College & University Rankings.
• Quality of School System: Double Weight (~5.71 Points)
  Note: Based on data from WalletHub’s States with the Best & Worst School Systems ranking.
• Public High-School Graduation Rate: Half Weight (~1.43 Points)
• Projected Public High School Graduation Rate Increase Between 2017-2018 and 2031-2032: Half Weight (~1.43 Points)
• Share of Idle Youth: Half Weight (~1.43 Points)
  Note: This metric refers to people ages 18-24 not attending school, not working, and with no degree beyond high school.
• States with Voucher Programs: Half Weight (~1.43 Points)
  Note: This binary metric measures the presence or absence of school voucher programs in a state.
  School voucher programs are a type of school choice. These state-funded programs – often called scholarship programs – allow students to use public monies to attend a private school. The state provides a set amount of money, typically based on the state’s per-pupil amount, for private school tuition.
• Presence of Free Community College Education: Half Weight (~1.43 Points)
• State Pre-K Funding per Preschool-Aged Resident: Half Weight (~1.43 Points)

Health – Total Points: 20

• Hospital Beds per 1,000 Residents: Full Weight (~2.50 Points)
• Quality of Public Hospitals: Double Weight (~5.00 Points)
  Note: Based on data from Centers for Medicare & Medicaid Services
• Average Life Expectancy at Birth (in years): Full Weight (~2.50 Points)
• Infant-Mortality Rate per 1,000 Live Births: Full Weight (~2.50 Points)
• Average Health-Insurance Premium: Full Weight (~2.50 Points)
• Quality of Health Care: Double Weight (~5.00 Points)
  Note: Based on data from WalletHub’s States with the Best & Worst Health Care ranking.

Safety – Total Points: 20

• Violent-Crime Rate per Capita: Double Weight (~10.00 Points)
• Property-Crime Rate per Capita: Full Weight (~5.00 Points)
• Fatalities per 100 Million Vehicle Miles Traveled: Full Weight (~5.00 Points)

Economy – Total Points: 20

• Median Annual Household Income: Double Weight (~5.00 Points)
  Note: Adjusted for cost of living
• Annual Job-Growth Rate: Full Weight (~2.50 Points)
  Note: Adjusted for population growth
• Share of Residents Living Below Poverty Line: Full Weight (~2.50 Points)
• Economic Mobility: Full Weight (~2.50 Points)
• Unemployment Rate: Double Weight (~5.00 Points)
• Underemployment Rate: Full Weight (~2.50 Points)

Infrastructure & Pollution – Total Points: 20

• Quality of Roads & Bridges: Double Weight (~5.00 Points)
• Average Commute Time (in minutes): Full Weight (~2.50 Points)
• Parks & Recreation Expenses per Capita: Full Weight (~2.50 Points)
• State Highway Spending per Driver: Full Weight (~2.50 Points)
• Water Quality: Full Weight (~2.50 Points)
• Share of Population Who Receive Fluoridated Water Through PWSs (Public Water Systems): Full Weight (~2.50 Points)
• Air Pollution: Full Weight (~2.50 Points)

Videos for News Use:

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• Raw files (for editing into clips)

 
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, National Center for Education Statistics, Western Interstate Commission for Higher Education, The Annie E. Casey Foundation, U.S. News & World Report, Education Commission of the States, Kaiser Family Foundation, Institute for Health Metrics and Evaluation, National Highway Traffic Safety Administration, Centers for Medicare & Medicaid Services, Natural Resources Defense Council, Centers for Disease Control and Prevention, Federal Highway Administration, United Health Foundation, Council for Community and Economic Research, Road Information Program, The Equality of Opportunity Project, Federal Bureau of Investigation and WalletHub research.

Image: Oleksiy Mark / Shutterstock.com

Community Discussion

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Anonymous

April 2, 2019

Cannot see in the details what state and local taxes are included in the report. We can assume income and sales taxes but are other taxes included

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Anonymous

April 1, 2019

There is absolutely no source provided for Total Taxes Paid Per Capita. Does it include property tax, sales tax? This data and ranking in their current state are useless.

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