Geography matters. Where taxpayers live makes a big difference in the services they receive for local and state taxes.
Everyone shoulders the same federal income tax burden, but citizens in each state pay very different local taxes. Whether those who pay more in their home states benefit from correspondingly superior government services is an open question.
Perhaps low-tax states are more efficient.
WalletHub, an online provider of tools and information for financial decision making, sought to answer this question by contrasting state and local tax rates with the quality of services funded at those levels.
In a new study, researchers separated services into six main categories—infrastructure, education, health, safety, economy and pollution—and evaluated 27 total sub-metrics designed to gauge the quality and efficiency of government operations in each area.
They then then compared each state's average government service ranking with its ranking from WalletHub's recent report on the states with the highest and lowest tax rates.
The result was a clear return-on-investment hierarchy for taxpayers across the 50 states and the District of Columbia.
(Related story on ThinkAdvisor: 10 Best & Worst Tax States for Retirees)
"A few states are in the sweet spot in terms of charging low tax rates and providing superior government services," WalletHub's senior analyst John Kiernan said in an email response to questions.
Many others are on the opposite end of the spectrum, Kiernan said, and some low-tax states offer relatively poor government services.
"The reasons why the highest ROI states rank where they do run the gamut from natural resources to population demographics to pure efficiency," he said.
Following are the 10 states that give taxpayers the best and the 10 that give the worst return on investment in terms of infrastructure, education, health, safety, economy, and water and air quality.
Best Taxpayer Value
10. Massachusetts
Tax Rate Rank: 21
Overall Government Services Rank: 7
Massachusetts is the sixth safest state in the country, while its health and educational systems both rank 12 and its economy 14. The quality of the Commonwealth's air and water quality ranks 26, and its infrastructure 42.
9. Utah
Tax Rate Rank: 14
Overall Government Services Rank: 5
Utah ranks second for the strength of its economy and fifth for its health system. It is also the seventh safest state in the country, and has the 10th best infrastructure. The state ranks 20 for its water and air quality, and 39 for its education system.
8. (tie) Texas
Tax Rate Rank: 7
Overall Government Services Rank: 24
Texas has the 10th strongest economy among all states, the 14th best health system and 17th best education system. The Lone Star State ranks 31 for infrastructure, 33 for safety and 42 for its water and air quality.
8. (tie) Florida
Tax Rate Rank: 4
Overall Government Services Rank: 36
Florida's highest ranking comes in infrastructure, 20, education, 21, and air and water quality, 28. It ranks 35 for its health system, and 40 for both safety and economy.
6. Colorado
Tax Rate Rank: 10
Overall Government Services Rank: 11
Colorado has the fifth best water and air quality in the country, ninth strongest economy and 11th best health system. The state's infrastructure ranks 17, education 22 and safety 32.
5. North Dakota
Tax Rate Rank: 9
Overall Government Services Rank: 14
North Dakota has the third best air and water quality among all states, and fourth best infrastructure and economy. Its health, education and safety are less stellar, at 37, 41 and 44, respectively.
4. Washington
Tax Rate Rank: 6
Overall Government Services Rank: 10
Washington's health system, air and water quality, education system and safety rank eight, 11, 15 and 16, respectively. Its economy stands at 21, and its infrastructure at 30.
3. South Dakota
Tax Rate Rank: 5
Overall Government Services Rank: 15
South Dakota ranks 2 for clear air and water, 7 for the quality of its infrastructure, 12 for its economy and 13 for its health system. However, it languishes at 43 and 46, respectively, for education and safety.
2. Alaska
Tax Rate Rank: 2
