With Tax Day coming up on April 18 and 44 million Americans expecting to pay this year’s taxes late due to the COVID-19 pandemic, WalletHub recently released its report on the states with the Best & Worst Taxpayer Return on Investment in 2022, as well as accompanying videos and expert commentary.

For the full report, visit: https://wallethub.com/edu/state-taxpayer-roi-report/3283

WalletHub used 30 metrics to compare the quality and efficiency of state-government services across five categories — Education, Health, Safety, Economy, and Infrastructure & Pollution — taking into account the drastically different rates at which citizens are taxed in each state.

Taxpayer ROI in California (1=Best, 25=Avg.):

47th – Overall ROI

42nd – Total Taxes per Capita (Population Aged 18+)

21st – Education

6th – Health

33rd – Safety

44th – Economy

43rd – Infrastructure & Pollution

Expert Commentary

Do states with high tax burdens provide better government services?

“Sometimes. Logically, more tax revenue should lead to more and better services and, in some places, that is certainly the case. In other places, the need for more tax revenue is the result of greater expenses. As just one example, an older city with vacant structures or outdated infrastructure that needs to be replaced may have more expenses and, if these expenses cannot be met in other ways, may impose higher taxes on residents and businesses.”

Matthew J. Rossman – Professor, Case Western Reserve University School of Law; Attorney at Law

How can everyday citizens assess the ROI of their local tax dollars?

“Return on Investment for public projects can be hard to assess since (1) the benefits accrue very far in the future and (2) the benefits may accrue to people outside of the community…In the end, a citizen should ask themselves ‘are these tax dollars going to a project that I value more than the dollars of taxes that I pay?’ For state and local government spending, people have some ability to ‘vote with their feet’ and leave a community if the government is providing goods or services that the constituents value less than their tax dollars. In these cases, people can move to places with governments that do allocate their taxes in a way they like.”

Daniel G. Garrett – Assistant Professor, University of Pennsylvania

What are the most efficient ways for local governments to mitigate the fiscal impact of the pandemic?

“Most cities were caught unprepared for the pandemic. Clearly, the pandemic has taught us that we need to be better prepared to fight a public health crisis. This plan needs to consider the supply of products, alternative facilities, stress on healthcare providers, etc.”

Paul K. Chaney – E. Bronson Ingram Professor of Accounting, Vanderbilt University

 “To some extent, this answer depends on the place in question, as the pandemic did not affect all places uniformly. Two ways that could apply broadly include, first, through initiatives aimed at supporting local businesses and employers, given how significant dollars spent locally are to the economic livelihood of residents. Second, by spending CARES Act funds left over after covering immediate revenue shortfalls, strategically on critical long-term infrastructure needs (e.g. public transit repair and modernization).”

Matthew J. Rossman – Professor, Case Western Reserve University School of Law; Attorney at Law