States With The Best and Worst Value for Your Tax Dollars

Coming in dead last in terms of the value of its residents’ tax dollars is the state of Hawaii, which is the only state whose residents pay more in taxes per capita than state and local governments spend. Negative bang for their bucks, as it were. Revenue collected from individual taxpayers ranks sixth in the nation, while revenue from corporate income taxes ranks 45th. Taxes in Hawaii make up 51.79% of all government revenues (seventh highest in the nation). While government expenditures on infrastructure and facilities is considerable, residents still pay on average more than the value of services received.

North Dakotans pay more per capita in taxes than residents of any other state, coming in second only to residents of the District of Columbia. And while North Dakota state and local governments spend slightly more per capita than per capita tax receipts, this amounts to a paltry 0.11% of the statewide average per capita income. The much-trumpeted Bakken shale boom in North Dakota has been a money-losing proposition for the state. In fact, North Dakota governments spends far more on natural resources than it receives in direct revenues (third-most) or that it makes up indirectly through taxes on corporate incomes. Residents benefit most from high education and highway spending, which are mostly offset by tuitions, tolls and fees, with a hefty tax burden barely sufficient to pay for other government services.

Connecticut is distinguished by its third-highest per capita tax burden, and for its proportion of state and local government revenue made up by taxes, which is second to none at 61.78%. Connecticut residents pay the third-highest amount in property and personal income taxes nationally, and despite average-to-respectable per capita state expenditures on items of value to its tax paying residents, Connecticut residents receive almost exactly what they paid for.

Residents of fourth-from-last-place Nevada pay lower taxes than do residents of Connecticut, North Dakota, and Hawaii, with per capita tax revenues the seventeenth highest in the nation. They also receive for that amount government expenditures that are the eleventh lowest nationwide. Government spending exceeds per capita revenues from taxes paid by individuals by a measly 0.38% of the average income per capita.

New Hampshire lacks both personal and corporate income taxes, as well as a statewide sales tax, resulting in a per capita tax burden that is equal to the median for all fifty states, the bulk of which is from property taxes (amounting to a per capita rate second only to New Jersey and the District of Columbia). New Hampshire’s government expenditures, however, rank thirty-sixth highest among all fifty states. Only sewerage and waste management expenditures rate in the top ten nationwide. State and local governments lean heavily upon liquor store revenues and fees for services in addition to property tax revenue to maintain spending on services and infrastructure that exceeds individual taxpayer revenue by 1.06% of per capita earnings.

Virginians’ total per capita tax burden comes in at 21st in the nation, while its per capita expenditures on taxpayer-beneficial items ranks 35th. Personal income taxes come in at ninth-highest nationwide, at $1,420.01 per capita, while corporate income taxes lag far behind, at fortieth, amounting to $97.56 in revenue per capita. While state government expenditures on various items are generally in in the second and fourth quintiles, it barely exceeds tax revenues collected per capita. Interestingly, with both revenues and expenditures related to natural resources, Virginia comes closer than any state but New York to turning a profit on its natural resources.

Indiana state and local government spends less per capita on public services and infrastructure (much privatized, like the Indiana Tollway) than anywhere across the nation, other than the states of Tennessee and Idaho. Tax revenues collected by Indiana governments amount to over $800 more per capita than in either of these low-spending states, thus diluting their value.

New Jersey’s tax burden is notoriously high, standing at sixth highest per capita tax revenue collected (excluding corporate income taxes), while state and local government expenditures for services and facilities comes in tenth nationally. With the highest property taxes per capita in the nation, coupled with income taxes in the top ten, New Jersey plays second fiddle only to Connecticut when it comes to the share of all government revenue that come from taxes paid into its coffers. New Jersey governments can hardly be considered stingy in terms of spending, especially on transit (seventh), hospitals (eighth), and unemployment insurance (first in the nation). Nor are they shy about charging fees, such as turnpike tolls (which so greatly offsets highway spending that New Jersey’s net highway and parking expenditures are lower than any other state).

Average per capita tax receipts in Colorado barely exceed the national median, while expenditures on items considered of value to resident taxpayers are lower on a per capita basis than two thirds of the states in the nation. While government expenditures outpace per capita tax revenues, especially on items such as unemployment insurance, transit investment, utilities, and parks/recreational facilities, high average per capita incomes in Colorado dilute the value returned on its residents investment in tax payments to local and state government.

The situation in tenth-place Maryland falls into the same pattern and fits into the same mold as New Jersey and Colorado: with the eighth-highest per capita tax revenues and the eleventh-highest per capita public spending, Maryland and its 24 counties can afford to spend big on infrastructure and public safety. But because it raises more than ten times more per capita in individual than corporate income taxes, Maryland’s per capita government spending exceeds tax revenues by only $1,088. Much as is the case for Colorado, this amount would be more than sufficient to lift Maryland out of the bottom ten, if not for the extraordinarily high average per capita incomes of Maryland residents. Were its per capita incomes to be no more than the national median, Colorado would rank 35th, while Maryland would tie for 33rd with Ohio.