[dropcap]S[/dropcap]o you are about to pay your taxes, and with Texas not having an income tax, most taxes paid during this time is federal income taxes.
According to the online company, WalletHub, there is a disconnect in the minds of taxpayers between the amount of money they pay in and how they view the ultimate return from the government.
Nearly three out of five U.S. adults feel they pay too much in taxes, and Americans estimate that Uncle Sam wastes slightly more than half of every tax dollar – higher than what they approximate state and local governments squander.
However, the taxpayer return on investment (ROI) varies significantly based on geography. Federal income-tax rates are uniform across the nation, yet some states receive more federal funding than others.
Depending on how you look at things, it is interesting to look at the disparity among states on their dependency on federal dollars.
The findings are based on several factors, including the states residents’ dependency and the state government’s dependency (federal funding as a share of state revenue).
So how does Texas rank? It actually ranks 35th overall in dependency on federal taxes, ranking 42nd in the states for the residents’ dependency, and 28th on the state government’s dependency on federal tax monies.
Texas sits right in the middle and doesn’t actually rank in federal contracts received.
States with the lowest amount of federal contracts (per $ in Federal taxes paid) include (in order) Delaware, Arkansas, New York, Ohio and New Jersey.
States receiving the most federal contracts: Mississippi (46), Alabama (47), Maryland (48), Virginia (49), and the state with the most federal contracts is New Mexico.
How do the states lean as far as the political “Red vs. Blue” categories?
Blue states are less dependent on the federal government (20.10 average rank), while Red States are more dependent (33.65 average rank).
But when you look at Return on Investment (ROI), Texas ranks much higher than its dependency on federal tax dollars, coming in at 9th place on the Taypayer ROI.
This ranking was based on five key government-service categories: 1) Education, 2) Health, 3) Safety, 4) Economy and 5) Infrastructure & Pollution.
Texas comes in 12th in the total taxes paid per capita rank and 28th in overall government services rank.
To get to the overall government rank, Texas is ranked
- 16th in Education
- 27th in Health
- 41st in Safety
- 11th in Economy
- 38th in Infrastructure and Pollution
Mattia Landoni, assistant profession of finance at Southern Methodist University in Dallas, explains some of conundrums between states.
How can state and local governments use tax revenue more efficiently?
“Efficiency is not a main goal of government spending. Money should be spent effectively in accordance with priorities set by the state or local government chosen by the people,” Landoni said. “In my experience, most government officials (at least the ones who make decisions) are competent and honest. Since public spending (like verything else) has decreasing marginal returns, a good rule of thumb would be to be very fiscally conservative, thus ensuring that only the projects with the highest bang for the buck get funded.”
