Where do your tax dollars go? GOP states offer best value, research finds
Taxpayers in red-leaning states typically get the most bang for their buck while their Democrat counterparts provide less value, a study has revealed.
Seven of the ten best states for ‘return on investment’ for taxpayers are Republican, the research found. At the bottom of the table, eight of the worst ten states are Democrat.
The research, by WalletHub, compared the taxes paid in each state with the quality of government services such as schools, infrastructure and law enforcement. States were defined as red or blue based on how they voted in the 2020 presidential election.
New Hampshire came out top, after the study found it has one of the lowest tax burdens but also one of the best scores for its government services. New Hampshire is key swing state, with a Republican governor but Democrats in the House and Senate.
California provides the worst value to taxpayers, according to the study, and has the highest tax bill per capita while ranking 35th for the quality of government services.
A study by WalletHub ranked states based on how much value residents get for their taxes. It found Republican states typically get more bang for their buck than their Democrat counterparts
New Hampshire came out top, after the study found it has one of the lowest tax burdens but also one of the best scores for its government services. Pictured: the New Hampshire State House in Concord
California was bottom of the league table after the study found residents have the highest tax burden in America but the state only ranks 35th for government services. Some businesses in San Francisco have even threatened to stop paying taxes because of its homeless crisis (pictured in August 2022)
The research was published ahead of the April 18 deadline for Americans to file their taxes.
A separate recent study by WalletHub found 73 percent of people don’t think the government spends their tax dollars wisely.
The new study explains: ‘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.
‘Federal taxes and support are only part of the story, though. 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?’
Many of the states that offer the best value don’t levy a state income tax: New Hampshire, Florida, Alaska, South Dakota, Texas and Wyoming.
The opposite is true for those that provide the worst value. California has the highest income tax in the country, at 13.3 percent.
Hawaii (11 percent), Oregon (9.9 percent), Vermont (8.75%) and New York (8.82%) also charge some of the highest income tax rates.
BEST VALUE STATES
1. New Hampshire
4. South Dakota
WORST VALUE STATES
41. New York
48. New Mexico
Florida was ranked the second best state in the country in terms of value for the taxpayer. Many of the states in the top ten don’t levy a state income tax. Pictured: South Beach, Miami
Texas was fifth in the the league table. Pictured: The Texas State Capitol in Austin
WalletHub said the research methodology compared the quality of government services received by residents to the total state and local taxes they pay in each of the 50 states.
Services were divided into five categories: education, health, safety, economy, and infrastructure and pollution.
Each category was then divided into a further 29 metrics which were graded on a 100-point scale and the averages were used to calculate the overall government services score.
Education included things such as the quality of the public university system, the high school graduation rate and Pre-K funding levels.
For health, the study used factors like hospital beds per 1,000 residents and the average live expectancy.
Safety was graded by looking at crime rates and the number of road fatalities.
The economy of states was judged on factors including household income, poverty and unemployment rates.
States’ infrastructure and pollution scores were ranked based on things like quality of roads, average commute times, water quality and air pollution.
Virginia had the best government services rank with a score of 71.12 out of a possible 100. It was followed by Minnesota (70.95), Vermont (68.77) and New Hampshire (68.17).
Louisiana scored worst with 32.49, followed by New Mexico (34.93), Alaska (36.09) and Mississippi (39.62).
The study follows a separate piece of research that found towns in the center of the country offered the best value for money, in terms of cost of living and tax, whereas coastal cities were the most expensive. The graph shows the takeaway value of a $100,000 after accounting for taxes and the cost of living
Memphis is the US city where a $100,000 salary goes the furthest. A lack of state income tax and a low cost of living means the effective take-home salary is around $86,000
New York City was the most expensive city in the country, where a combination of state tax and high cost of living meant a $100,000 salary felt more like $36,000
The new research follows a separate study that found a $100,000 paycheck goes the furthest in Memphis, Tennessee, while New York City is the worst city in the United States to live on the sum.
In Memphis, the relative value of the six-figure salary equates to about $86,000 after the cost of living is accounted for, while in New York City it is equal to only about $35,000.
The startling data was compiled by the personal finance advisor SmartAsset, which considered state and local taxes, local living costs, and the effects of recent inflation, to determine which cities were the cheapest and most expensive to live in.
Seven out of the ten cheapest cities – where $100,000 went the furthest – were in Texas, while six of the most expensive cities were in California and on the west coast.
In New York City – the least cost-effective city to live in the country – local taxes and costs of living gutted a $100,000 paycheck to an effective take-home pay of $35,791.
Source of data and images: dailymail