Study: Red States Have Higher Taxpayer Return on Investment (ROI)

TALLAHASSEE, Fla. – Florida Gov. Rick Scott attends the “First for Jobs” rally with roughly 600 people on March 14, 2017. (Photo: Carolyn Allen)

A new study finds Red States have a higher taxpayer return on investment (ROI) than Blue States, with an average ranking of 20.60 juxtaposed to 32.85.

WalletHub took a look at state and local tax collections for each of the 50 states and contrasted them with 25 key metrics to gauge the quality of the services residents receive. They were broken down by 5 categories: Education, Health, Safety, Economy, and Infrastructure & Pollution.

Each category was worth 20 points.

Worth noting, States were classified as Red or Blue based on how they voted in the 2016 presidential election. That’s significant considering several states have policies that would not be considered Red or Blue. For instance, New Hampshire, which ranked first for ROI, is not a tax-and-spend state.

Whether it’s currently led by a Democrat or voted for a Democrat on the national level, policy-wise The Granite State is a conservative state.

Rank (1=Best)	State	Rank (50=Worst)	State
1	New Hampshire	41	Maryland
2	Florida	42	Delaware
3	South Dakota	43	Nevada
4	Colorado	44	New Mexico
5	Virginia	45	Vermont
6	Alaska	46	New York
7	Missouri	47	North Dakota
8	Texas	48	California
9	Utah	49	Arkansas
10	Iowa	50	Hawaii

Hawaii, which is arguably the Bluest of Blue States, has the worst taxpayer return on investment (ROI), with Arkansas (Red) and California (Blue) not far behind at 49 and 48, respectively.

Federal Taxes Paid vs. Spending Received by State

‘Taxpayer ROI’ Rank (1=Best)	State	‘Total Taxes Paid per Capita’ Rank*	‘Overall Government Services’ Rank
1	New Hampshire	3	2
2	Florida	2	31
3	South Dakota	10	14
4	Colorado	14	13
5	Virginia	17	9
6	Alaska	1	49
7	Missouri	5	35
8	Texas	6	36
9	Utah	21	10
10	Iowa	36	3
11	Nebraska	28	11
12	Georgia	11	39
13	South Carolina	4	42
14	Arizona	12	37
15	Wisconsin	35	6
16	Tennessee	8	41
17	Idaho	23	20
18	Oklahoma	13	40
19	Ohio	15	32
20	Indiana	25	22
21	Kansas	30	16
22	Montana	16	33
23	North Carolina	19	30
24	Alabama	9	47
25	Maine	32	18
26	Illinois	34	15
27	Rhode Island	33	19
28	Michigan	27	29
29	Pennsylvania	31	25
30	Oregon	26	34
31	Kentucky	22	38
32	Wyoming	39	17
33	Washington	37	24
34	Louisiana	7	50
35	New Jersey	41	12
36	Massachusetts	43	7
37	Minnesota	47	1
38	Mississippi	18	45
39	Connecticut	46	8
40	West Virginia	24	44
41	Maryland	40	27
42	Delaware	42	23
43	Nevada	29	43
44	New Mexico	20	48
45	Vermont	48	4
46	New York	44	21
47	North Dakota	50	5
48	California	45	28
49	Arkansas	38	46
50	Hawaii	49	26

*“Per Capita” includes the population aged 18 and older.

Methodology

In order to determine which states yield the best and worst return on investment (ROI) for taxpayers, WalletHub compared the quality of government services received by residents to the total state and local taxes they pay in each of the 50 states.

First, we analyzed each state across five key government-service categories: 1) Education, 2) Health, 3) Safety, 4) Economy and 5) Infrastructure & Pollution. The categories were further broken down into 25 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the best quality of government service.

We then determined each state’s weighted average across all 25 metrics to calculate its “Overall Government Services Score.”

Finally, we constructed the Taxpayer ROI ranking by comparing each state’s “Overall Government Services Score” to its “Total Taxes Paid per Capita.” “Per Capita” includes the population aged 18 and older.