Vermont ranks number 10 in getting best bang for tax buck

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Vermont ranks number 10 in getting best bang for tax buck

Thu, 03/15/2018 - 10:53am -- tim

Vermont Business Magazine It’s tax season and Americans across the country are more interested than ever in knowing that their tax dollars are going to good use; and in some places around the country, those dollars are worth more than in other locations. RewardExpert today released a report analyzing States With The Best and Worst Value for Your Tax Dollars. Vermont finished number 10 in the nation, with Alaska best and Hawaii worst. As for the lower 48 states, New Mexico was best and North Dakota worst. New Hampshire was 46th. The list (see below) does not run along typical blue-state/red-state political lines, as tax rankings typically do.

RewardExpert – a free service that helps users take full advantage of credit card points and travel rewards – analyzed Census Bureau data to determine the top ten states where residents receive the best value for their tax dollars in government spending on services, infrastructure, education, and public safety, and the ten states in which residents receive the least valuable return for their tax dollars.

“Taxes are a necessary and unpleasant reality. No one wishes to hand over more of their hard-earned money to the government of their state, city, county, or country than they must,” says RewardExpert CEO and co-founder Roman Shteyn. “Yet it is all too easy to overlook the fact that the federal, state and local governments use tax revenues in ways that directly or indirectly benefit the taxpayer. The best deal is not always the one that costs least. And so, we analyzed government data in order to answer the questions: where do you get the most bang for your tax buck? Where do you get the worst return on your investment in your state and local government?”

The three states that offer the most value for resident tax dollars are:

  • Alaska - Alaska tops our list of states whose residents get the most value for their tax dollars. State and local government expenditures on infrastructure and services exceed tax revenues by nearly 300%, with per capita expenditures surpassing per capita tax revenues by an amount equal to 12.38% of the average Alaskan’s income.
  • New Mexico – Second-place New Mexico’s per capita state and local government spending exceeds tax revenues payable by individual residents at a ratio of nearly 2 to 1; spending $3,395 more per New Mexican than it receives on a per capita basis.
  • Wyoming - Wyoming collects enough in sales and property taxes (sixth and seventh-place in per-capita terms) to offset its lack of personal or corporate income taxes. State and local governments in Wyoming offer net benefits to taxpayers amounting to a yearly bonus of 5.24% of the average resident’s income.

The three states that offer the least value for taxpayer dollars are:

  • Hawaii - 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 with -0.16% tax ROI; negative bang for their bucks, as it were.
  • North Dakota - 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.
  • Connecticut - 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%.

“Taxes do not disappear into a bureaucratic black hole,” says Shteyn, “but rather help pay for valuable government operated or administered services, and to invest in infrastructure, public safety, and essential social safety-net programs, such as unemployment insurance and workers’ compensation, that tend to get taken for granted by many of us. Nothing is certain but death and taxes, as they say, and if we have to face these inevitabilities it’s helps to know where you’re getting the most out of your money.”

RewardExpert used data from the U.S. Census Bureau’s Survey of State and Local Government Finances to calculate the sum total of all expenditures that benefits individual taxpayers and calculated per capita government spending.  The value of residents’ tax dollars was calculated as the difference between per capita spending and per capita tax revenues collected, excluding corporate income taxes. All fifty states were ranked according to the amount by which government spending exceeded taxes collected on a per capita basis.

Vermont Comment

"At number ten, we have Vermont closing out our list of states with the best average value returned per tax dollar. Despite paying a relatively large sum in taxes, Vermonters get back more than they pay, with state and local government spending in the top five nationally in categories such as education, highways, public welfare, and public health. Interestingly, the fact that only Vermont’s state and local governments lose money on liquor store sales does not significantly affect personal or public finances in the state."

New Hampshire Comment

"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 corporate income taxes 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."

For further information and to view the full report, visit the RewardExpert website.

RewardExpert Methodology

RewardExpert used data from the US Census Bureau’s Survey of State and Local Government Finances to calculate the sum total of all expenditures that benefits individual taxpayers, accounting for non-tax fees and charges, and calculated per capita government spending. We then calculated the value of residents’ tax dollars as the difference between per capita spending and per capita tax revenues collected, excluding corporate income taxes. Based on the results, ranked the fifty states (excluding the District of Columbia) according to the amount by which government spending exceeded (or, in one case, fell short of) taxes collected on a per capita basis.

Full Ranking

Full ranking and complete data for all fifty states

State Final Rank Per Capita Tax Expenditures
Per Capita
Government Spending* Rank Taxes
% of Revenue
Taxes
% Of Revenue
Alaska 1 3,430.68 12,512.07 -12.38% 50 22.54%
New Mexico 2 4,337.18 7,722.06 -7.46% 49 35.82%
Wyoming 3 6,829.28 9,987.96 -5.25% 48 35.84%
Kentucky 4 4,048.87 6,334.21 -5.05% 35 41.64%
New York 5 8,177.15 11,046.25 -4.72% 9 51.02%
Delaware 6 4,468.53 7,335.28 -4.68% 24 43.68%
Arkansas 7 4,053.52 5,958.16 -4.54% 26 42.91%
Mississippi 8 3,886.77 5,607.24 -4.24% 44 37.49%
Oregon 9 4,650.15 6,757.91 -3.89% 47 36.01%
Vermont 10 6,542.02 8,753.07 -3.88% 13 48.15%
Louisiana 11 4,437.60 6,144.70 -3.73% 31 42.58%
West Virginia 12 4,714.55 6,254.06 -3.66% 32 42.11%
California 13 5,891.29 8,217.41 -3.61% 21 44.77%
Wisconsin 14 4,810.29 6,748.68 -3.48% 20 45.52%
Montana 15 4,364.46 6,086.48 -3.48% 37 41.61%
Massachusetts 16 6,113.72 8,262.35 -3.04% 8 51.17%
Iowa 17 5,000.54 6,647.30 -3.01% 28 42.63%
Tennessee 18 3,381.82 4,766.74 -2.93% 43 38.13%
Alabama 19 3,555.74 4,865.47 -2.93% 46 36.31%
Arizona 20 3,591.09 5,040.15 -2.81% 31 42.37%
Oklahoma 21 3,952.33 5,317.45 -2.81% 38 41.49%
Pennsylvania 22 5,244.96 6,760.58 -2.72% 14 47.97%
South Carolina 23 3,643.75 4,870.20 -2.60% 45 36.67%
Washington 24 5,532.05 7,189.91 -2.59% 39 41.48%
Michigan 25 4,245.45 5,551.72 -2.56% 36 41.63%
Missouri 26 3,869,46 5,128.94 -2.51% 34 41.65%
Rhode Island 27 5,754.05 7,095.93 -2.31% 12 48.75%
South Dakota 28 4,356.19 5,580.82 -2.31% 25 43.15%
Nebraska 29 5,025.83 6,265.50 -2.25% 40 41.46%
Georgia 30 3,691.69 4,793.64 -2.15% 19 45.54%
North Carolina 31 4,016.75 5,034.56 -2.13% 27 42.87%
Idaho 32 3,529.84 4,508.18 -2.03% 23 44.01%
Ohio 33 4,908.59 5,933.05 -2.01% 41 41.43%
Florida 34 3,850.85 4,835.35 -1.99% 33 41.97%
Minnesota 35 6,288.82 7,416.32 -1.78% 11 49.30%
Kansas 36 4,524.12 5,444.82 -1.71% 18 46.07%
Maine 37 5,412.04 6,276.15 -1.68% 4 54.50%
Illinois 38 5,912.85 6,904.65 -1.66% 6 53.98%
Utah 39 3,859.23 4,851.98 -1.58% 42 39.54%
Texas 40 4,749.16 5,558.92 -1.46% 16 47.46%
Maryland 41 6,343.28 7,430.94 -2.01% 5 54.08%
Colorado 42 4,789.86 5,845.36 -1.40% 29 42.61%
New Jersey 43 6,548.81 7,552.43 -1.39% 2 56.45%
Indiana 44 4,098.72 4,775.48 -1.34% 22 44.06%
Virginia 45 4,822.10 5,548.30 -1.10% 15 47.76%
New Hampshire 46 4,725.00 5,469.76 -1.06% 10 50.41%
Nevada 47 5,059.25 5,259.82 -0.38% 17 46.59%
Connecticut 48 7,731.83 7,860.78 -0.20% 1 61.78%
North Dakota 49 9,465.36 9,532.74 -0.11% 3 56.22%
Hawaii 50 6,942.53 6,825.88 0.16% 7 51.79%
US TOTAL   5,101.11 6,587.01 -2.63%   45.84%

*Government Spending in Excess of Revenue (Per Capita) as % of Average Statewide Per Capita Income (Value Used for Final Ranking)

Indicators & Scoring:

  • 1) Total tax revenue collected (per capita & gross)
  • 2) Corporate income tax revenue
  • 3) Selected government expenditure, by category:
    • Education
    • Health & Hospitals
    • Employment Security Admin
    • Highway & Parking Facilities
    • Utilities
    • Unemployment & Workers Comp
    • Sewer & Waste Management
    • Public Welfare
    • Police & Fire Protection
    • Parks & Recreation
    • Cash Assistance Programs
    • Transit
  • 4) Fees & Charges for First column above, plus Health & Hospitals and Utilities
  • 5) Government assets, securities, and trust funds
  • 6) Population and Average Per Capita Income

Sources Data

Survey of State and Local Government Finances, Census Bureau. Most recent Data Released September-October 2017. Previous data set released in 2012. Data set includes state and local revenue/spending both as separate totals and combined. This report utilizes the combined state+local totals to calculate statewide averages.

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Source: RewardExpert. 3.15.2018. www.rewardexpert.com/blog/studies/states-with-the-best-and-worst-value-for-your-tax-dollars