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

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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.
 

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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:

 
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

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