Florida ranks #3 for taxpayer return on investmentMarch 26, 2019
Florida taxpayers get what they pay for, according to a new analysis from WalletHub.
The study concluded Florida has the third-best taxpayer return on investment in the United States.
WalletHub aimed to answer the oft-debated question: Do individuals residing in high-tax states receive superior government services?
To find the answer, the personal finance website contrasted state and local tax collections for all 50 states with the quality of services residents receive. The services measured fall within five categories: education, health, safety, economy, and infrastructure and pollution.
To calculate return on investment, WalletHub compared each state’s overall government services score to its total taxes paid per capita.
While Florida ranked high on return on investment, it came in at No. 33 for overall government services.
The state’s education system fared well, ranking No. 9 out of 50. But it received low marks for infrastructure and pollution (35) healthcare (36), safety (37) and economy (38).
Florida does not have a personal income tax. New Hampshire, also a tax-free state, was ranked No. 1 in the U.S. for return on investment, followed by no-tax South Dakota. Both New Hampshire and South Dakota received above-average overall government services score at 7 and 17 respectively.
Only seven U.S. states have no personal income tax – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Tennessee and New Hampshire limit their tax to interest and dividend income, not income from wages.
Although states and localities with more tax revenue often have better services, that’s doesn’t always require a lofty personal income tax rate. For example, low tax states often collect revenue via sales and property taxes.
Minnesota, Vermont and North Dakota had the top government services scores, according to WalletHub. Minnesota, which has the nation’s third-highest state income tax rate at 9.9 percent, ranked No. 1 for education and No. 2 for both education and economy.
Vermont, which has an 8.95 percent tax rate, ranked No. 1 for safety, No. 4 for education and No. 6 for health, but had a below-average economy score at 36.
At 13.3 percent, California has the highest personal income tax in the U.S.
But that didn’t translate to strong service rankings: California came in at No. 31 for its overall government services and was near the bottom of the list (48) for its taxpayer return-on-investment.