Another Top-10 List — States Where Taxpayers Get the Biggest (and Least) Bang for the Buck

It is not at all surprising to me when surveys show that some people believe they do not pay too much in federal income taxes. That’s because so many people pay zero federal income taxes. The last Gallop Poll on this topic (2016) shows that, while 57 percent believe income taxes are too high, 37 percent responded they are just right and 3 percent stated they were too low. Correspondingly, the lower 50-percent of income earners pay just 2.8 percent of the total federal income taxes collected.

The following table shows income tax payments by income segment.

4-3-17 table1

 

As tax day quickly approaches, income tax payments to the Federal government are soon due. For most, their income tax obligations do not end there, but also extend to state and even local income taxes in some jurisdictions. At the local level, within 17 states there are almost 5,000 taxing jurisdictions imposing income taxes. All but seven states have some form of income taxes. Those not paying a state income tax include:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming

Two other states, New Hampshire and Tennessee, while not having an income tax on wages, do collect taxes on dividends and investment earnings.

While most do pay taxes, there are no doubt returns from that spending. We will never agree on all the services that government should provide as was shown in the election last November.

So how does each state compare in the services delivered to their residents? To answer that, Wallethub looked at taxes paid across the country by state and then examined respective services provided and their quality. Wallethub created an index based on five major categories (weighting 20 points each).

Education

  • Quality of Public University System – National University Rankings
  • Public High School Graduation Rate
  • Quality of School System – Wallethub’s States with the Best School Systems Rankings

Health

  • Hospital Beds Per 1,000 Residents
  • Quality of Public Hospitals – Centers for Medicare & Medicaid Services
  • Average Life Expectancy at Birth
  • Infant Rate Mortality per 1,000 Live Births
  • Average Health-Insurance Premium
  • Quality of Healthcare – Wallethub’s States With Best & Worst Health Care

Safety

  • Violent Crime Rate per Capita
  • Property-Crime Rate Per Capita
  • Fatalities per 100 Million Vehicle Miles Traveled

Economy

  • Median Annual Household Income – cost of living adjusted
  • Annual Job Growth Rate – population growth rate adjusted
  • Share of Residents Living Below Poverty Line
  • Economic Mobility
  • Unemployment Rate
  • Underemployment Rate

Infrastructure and Pollution

  • Quality of Roads & Bridges
  • Average Commute Time (minutes)
  • Parks & Recreation Expenses
  • Water Quality
  • Air Pollution

The study’s findings of the 10 best and worst states for taxpayer return on investment follow. Taxes paid per capita are ranked from least to most.

4-3-17 table2

4-3-17 table3

 

To read the entire article from Wallethub click https://wallethub.com/edu/state-taxpayer-roi-report/3283/

As stated when writing about this same study in 2014:

Realize that even within each state, the ROI can be broadly different across the taxpayer base. A former government worker from a state that provided retirement to 50 somethings probably feels they have achieved a great return, while others without such benefits perceive otherwise.

What is wallethub.com? It is a social network related to financial well-being. It was started by Evolution Finance in 2012. Their offering includes Card Hub, which allows consumers to compare and evaluate various credit card offerings.

Hope you are getting your bang for the buck—but you pay regardless.

Ted

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