A new report by WalletHub analyzing the tax landscape of each state found that lower-taxed states have a higher taxpayer return on investment than higher-taxed states.
According to a recent WalletHub Taxpayer Survey, 60 percent of adults surveyed said they pay too much in taxes; 88 percent said they don’t think governments uses tax revenue wisely.
“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,” John Kiernan, managing editor at WalletHub, writes.
WalletHub’s Best & Worst Taxpayer Return on Investment in 2020 evaluated tax burdens by state to determine if those living in higher taxed states receive a greater return for their investment than those who live in less taxed states. The study also looks at if lower-taxed states are more efficient with fewer resources or simply provide lower quality services.
The report sought to answer the question of where taxpayers get the most and least for their money by comparing state and local tax collections with the quality and efficiency of state government services residents receive in each of the 50 states. It evaluated a data set of 30 metrics within five categories: education, health, safety, economy, and infrastructure and pollution.
The top ten states with the best taxpayer ROI, according to Walethub’s study, are New Hampshire, which ranks first, followed by South Dakota, Florida, Virginia, Georgia, Ohio, Missouri, Utah, Colorado and Nebraska.
The ten states with the worst taxpayer ROI are Hawaii, which ranks last, followed by California, North Dakota, Connecticut, Arkansas, New York, New Mexico, Louisiana, Vermont and Delaware.
Among red states, which generally tax residents less, WalletHub found a higher taxpayer return on investment than those living in blue states by about a 10 percentage point difference.
Red state Tennessee, for example, has the lowest proportion of major roads in poor or mediocre condition, at 13 percent. Even though residents pay lower taxes, their roads are in better shape than in states where residents pay higher taxes. Tennessee’s ROI was 6.1 times better (lower) than blue state Rhode Island’s, which holds the highest percentage of ROI at 79.
Anomalies stand out in blue states with higher taxes that also have the best school systems, like Massachusetts, New Jersey, and Connecticut. The worst school systems were in red states like West Virginia, Mississippi and Arizona. The highest violent crime rates were also in lower taxing red states like Nevada, Arkansas and Tennessee.
The Taxpayer ROI ranking compares each state’s “Overall Government Services Score” to its “Total Taxes Paid per Capita,” which includes a population aged 18 and older.
The report is based on a plethora of data published by federal and state agencies, and nonprofit foundations, among others.
This article was first published by The Center Square.
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