Taxpayer Return on Investment

In a couple recent posts, Poverty, Taxes and Getting Skin in the Game here on this blog, and Are You Overtaxed? over at Freedom is Groovy, Mr. Groovy and I exchanged some thoughts on taxation. One of the things we both noted is that our government, at all levels, needs to be more efficient in the way it spends taxpayer’s dollars.

Taxpayer ROI

Earlier today, WalletHub released its latest analysis of the U.S. tax landscape, an in-depth look at the states with the Best & Worst Taxpayer Return on Investment in 2016. WalletHub used 20 metrics to compare the quality and efficiency of state-government services across five distinct categories — Education, Health, Safety, Economy, and Infrastructure & Pollution — taking into account the drastically different rates at which citizens are taxed in each state.

The top three states with the best taxpayer Return on Investment (ROI) were New Hampshire, South Dakota and Colorado. Heading up the worst states? New Mexico, Vermont, and Connecticut.

Some highlights comparing the best and worst:

  • California has the highest proportion of major roads that are in poor condition, 51 percent, which is seven times higher than in Florida, the state with the lowest, 7 percent.
  • Alabama has the highest infant mortality rate per 1,000 live births, 8.68, which is two times higher than in California, the state with the lowest, 4.30.
  • Alaska has the highest violent-crime rate per 1,000 residents, 6.36, which is six times higher than in Vermont, the state with the lowest, 0.99.
  • Louisiana has the highest incarceration rate per 100,000 residents age 18 or older, 1,072, which is six times higher than in Maine, the state with the lowest, 189.
  • Wisconsin has the highest public university system” score, which is three times higher than in Nevada and New Mexico, the states with the lowest.
  • Red and Blue States nearly tie in terms of taxpayer return on investment, with Red States yielding slightly better ROIs.

Check out WalletHub for the full report to see where your state ranks.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. I graduated from university of Wisconsin Whitewater, started at UW-Milwaukee and UW-Waukesha and did research at UW-River falls/UW-Madison. I’ve seen a lot of the UW system. Anyway, I’ve heard the reason the University of Wisconsin school system is so great is because it’s a more integrated system, they all work together, you can transfer pretty easily and tuition wasn’t outrageous. It’s not perfect but light years better than most state universities from what I’ve heard.

  2. Hey, James. Another thought-provoking read! You love to get people thinking, don’t you? Here’s my gut reaction. Beyond a certain point, government spending is immaterial. The key factor becomes culture. Case in point. New York state spends a lot more on public education than North Carolina. But according to the Washington Post (see link below), North Carolina kids have slightly higher SAT scores than New York kids. Are North Carolina kids smarter than New York kids? I highly doubt it. I just think North Carolina currently has a slightly higher percentage of kids who are applying themselves. And this analysis probably applies to most government activity. A state could always spend more on health care, for instance. But the ROI on this spending will not be high if a large percentage of its residents drink, smoke, and eat like slobs. So there are my half-baked thoughts on this very intriguing post. No state government is under-spending. ROI is the wrong metric. We just got to work on becoming better people.

    • Thanks for stopping by, my friend. I’ll have to give the referenced story a read. The last one, How a Perks Binge Sweetens the Pay of Massachusetts College Chiefs, was a good read; unfortunately, it wasn’t too surprising.

      I absolutely agree that every issue can’t be overcome/improved by throwing money at it. However, what we have to strive for is to find that tipping point. We have to be able to commit the money required to get the most bang for the buck – not a dollar more – ensuring there is little friction (i.e. loss) as possible as it moves through the system to its destination. And as you allude to, individuals need to help themselves as much as possible. As I often note, getting better is often centered around five actions: eating less, eating better, minimizing debt, saving more and working out more.

      • I couldn’t agree more. And your last sentence is pure gold. I’m committing your five-action credo to memory.

  3. VERY interesting that red and blue states tie in terms of ROI. My guess is that Republicans are convinced that their style of governing leads to better a ROI on taxes. But I suppose there might be some bias in the metrics used and how they’re measured? (I don’t know the political leanings of WalletHub.)

    • Yep, it would be interesting to take a detailed look into the numbers behind the results. As with most things, the numbers can be massaged based on biases.

      Thanks for stopping by, my friend.

  4. Massachusetts here — at least we’re #5 on government services rank! 😛

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