WalletHub: Illinois Ranks 31st in Taxpayer Return on Investment

WalletHub: Illinois Ranks 31st in Taxpayer Return on Investment

As Tax Day approacheth, WalletHub on Tuesday (April 5, 2016) released its latest analysis of the U.S. tax landscape, which looks at the states with the Best & Worst Taxpayer Return on Investment in 2016.

WalletHub used 20 metrics to compare the quality and efficiency of state-government services across five distinct categories — education, health, safety, economy, and infrastructure & pollution — taking into account the drastically different rates at which citizens are taxed in each state.

Shockingly, Illinois wasn’t at the top of the taxpayer return-on-investment list. Then again, the Land of Lincoln wasn’t at the bottom, either. With a ranking of 1 to 50, Illinois is 31st in total ROI, according to WalletHub. Here’s a quick look at how WalletHub ranked Illinois in various categories:

Taxpayer ROI in Illinois

  • 31st – Overall ROI
  • 36th – Total Taxes per Capita (Population Aged 18+)
  • 10th – Education
  • 29th – Health
  • 16th – Safety
  • 19th – Economy
  • 37th – Infrastructure & Pollution

For the record, New Hampshire was No. 1 in taxpayer bang for the buck, followed by South Dakota, Colorado, Virginia and Florida.

No. 50 on the list, interestingly, was No. 1’s sister state: North Dakota. Alaska was No. 49, Hawaii No. 48, New York No. 47 and Delaware No. 46.

According to WalletHub, two out of five U.S. adults feel they pay too much in taxes. Americans estimate that slightly more than half of every tax dollar is wasted by the federal government — higher than the amounts they approximate state and local governments squander.

“One thing we do know is that taxpayer return on investment varies significantly based on simple geography,” WalletHub says. “Federal income-tax rates are uniform across the nation, yet some states receive far more federal funding than others.”

As always, it’s good to understand that stories like these are more conversation starters than definitive measures of performance.

WalletHub asks three experts the following questions:

  1. Do states with high tax burdens provide better government services?
  2. How can state and local governments use tax revenue more efficiently?
  3. How can average citizens assess the ROI of their local tax dollars?

Their answers vary, as you might expect.

In Kane County, there are a couple of ways to get better informed about how your tax dollars are spent. Kane County Auditor Terry Hunt, for example, has come up with a measurement he calls the “Effective Tax Rate,” which is calculated by dividing a county’s total property value by its levy request. Last November, Hunt also presented a cost-per-resident measurement, which he says is another simple way to illustrate what kind of bang residents are getting for their property-tax buck.

Citizens can follow how Kane County government money is spent is via the county’s OpenGov website.

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Methodology

In order to determine which states yield the best and worst return on investment (ROI) for taxpayers, WalletHub’s analysts compared the 50 states across five key categories: 1) Education, 2) Health, 3) Safety, 4) Economy and 5) Infrastructure & Pollution.

WalletHub first compiled 20 relevant metrics, which are listed below with their corresponding weights. Each metric was given a value between 0 and 100, wherein 100 corresponds with the best state for governmental services and 0 with the worst.

WalletHub then calculated the overall score for each state using the weighted average across all metrics and ranked the states accordingly.

In addition, WalletHub compared each state’s Average “Government Service” Score to its “Total Taxes per Capita (Population Aged 18 & Older)” Ranking in order to provide an ROI hierarchy for taxpayers across the 50 states.

Education – Total Points: 20

  • “Public University System” Rank (Overall Score): Full Weight (~10.00 Points)
  • WalletHub “School Systems” Rank: Full Weight (~10.00 Points)

Health – Total Points: 20

  • Number of Hospital Beds per 1,000 Residents: Full Weight (~4.44 Points)
  • “Public Hospital System” Rank: Full Weight (~4.44 Points)
  • Average Life Expectancy at Birth (in years): Full Weight (~4.44 Points)
  • Infant Mortality Rate per 1,000 Live Births: Full Weight (~4.44 Points)
  • Average Health-Insurance Premium: Half Weight (~2.22 Points)

Safety – Total Points: 20

  • Crime Rate per Capita: Double Weight (~10.00 Points)
  • Fatalities per 100 Million Vehicle Miles Traveled: Full Weight (~5.00 Points)
  • Incarceration Rate per 100,000 U.S. Residents Age 18 or Older: Full Weight (~5.00 Points)

Economy – Total Points: 20

  • Unemployment Rate: Double Weight (~5.71 Points)
  • Median Annual Household Income (adjusted for cost of living): Full Weight (~2.86 Points)
  • Annual Rate of Job Growth (adjusted for population growth): Full Weight (~2.86 Points)
  • Percentage of Residents Below the Poverty Line: Double Weight (~5.71 Points)
  • Economic Mobility: Full Weight (~2.86 Points)

Infrastructure & Pollution – Total Points: 20

  • Quality of Roads & Bridges: Full Weight (~4.00 Points)
  • Average Commute Time (in minutes): Full Weight (~4.00 Points)
  • Parks & Recreation Expenses per Capita: Full Weight (~4.00 Points)
  • Water Quality: Full Weight (~4.00 Points)
  • Air Pollution: Full Weight (~4.00 Points)

Sources: Data used to create these rankings were collected from the U.S. Census Bureau, Bureau of Labor Statistics, the National Center for Education Statistics, the National Highway Traffic Safety Administration, the Centers for Medicare & Medicaid Services, the Manhattan Institute, the Centers for Disease Control and Prevention, Missouri Economic Research & Information Center, The Equality of Opportunity Project, the Federal Bureau of Investigation, TRIP, America’s Health Rankings, Annie E. Casey Foundation, Measure of America and WalletHub research.