No one likes paying more in taxes than they have to. But the
worst thing is when your state and local governments don't make
the best use of the tax revenue they collect.
Recently, WalletHub did a study on how good a job various
state governments do in making best use of their tax revenue to
provide essential services for their residents. Those services
include education, health, and safety, as well as infrastructure,
economic conditions, and air and water quality. Although
some states do a great job
some states do a great job of making the most of their tax
dollars, others don't provide much bang for the buck when it
comes to giving residents what they want. Let's look at the
states -- inclusive of D.C. -- that the study found did the worst
Images courtesy U.S. Mint.
Tobacco plantation. Source: Wikipedia.
5. North Carolina
North Carolina ranked ninth-worst in terms of delivering
government services to its residents, which is particularly bad
given that it finished in the bottom third in terms of favorable
tax structure. The state finishes consistently in the bottom 20
in nearly all areas, with only safety services rising into the
top half. Meanwhile, North Carolina's tax burden was 12% higher
than the national average, with a 5.8% income tax and a 4.75%
state sales tax that jumps to nearly 7% when you add in local
sales taxes. Despite the rise of technology services in the
Research Triangle area of the state, North Carolina is still the
nation's leader in tobacco production, and both
have headquarters within the state.
4. District of Columbia
Washington, D.C., also had a bad combination of tax and
government services, ranking eighth worst on the services front
and No. 15 in terms of worst taxes. The district does worst in
the areas of health and pollution, but even in its best areas of
safety and economic performance, it fails to get into the top
half of jurisdictions across the country. Meanwhile, individual
income tax rates range all the way up to 8.95%, and a 5.75% sales
tax combined with high property tax collections make Washington,
D.C., a particularly unfavorable tax environment. D.C.'s
challenges as a completely urban area with a complex governance
structure between local and federal control make it tough for
government authorities to coordinate services effectively.
Louisiana State Capitol. Image: Flickr/Stuart Seeger
Louisiana's tax rates actually are relatively good, ranking in
the best third of the nation in terms of attractiveness given its
low property taxes and top income tax rate of just 6%. But the
state is the third worst at providing essential government
services, finishing second-to-worst in education and appearing in
the bottom dozen for infrastructure and health services. An
economy driven by energy and tourism has led to boom and bust
periods, especially in light of the devastation that Hurricane
Katrina did in 2005. Along with Mississippi and other Gulf
states, Louisiana has gotten millions from
for tourism promotion since the Gulf oil spill, but even with the
rise of promising energy-production areas like the Haynesvile
Shale, Louisiana still struggles to recover from all the
catastrophes it has faced.
Like Louisiana, Mississippi has relatively low taxes, appearing
among the best 15 states in the country. It has a top income tax
rate of just 5%, and although sales taxes come in at 7%, property
taxes are relatively low. But Mississippi ranks worst in the
nation in delivering government services, with the worst economic
environment in the country and bottom-10 showings in education
and health services. Mississippi just barely gets into the top
half in terms of safety. Perhaps most tellingly, Mississippi is
the most reliant of any state on federal-government support.
Image: Jonathan Babin via Flickr.
Arkansas tops the overall list, with the second-worst services in
the country and taxes that put the state in the worst half of the
nation. State income taxes range as high as 7%, with a state and
local sales tax that averages more than 9% despite low property
taxes. Arkansas ranks in among the 10 worst for health and safety
services as well as economic environment, despite being home to
the nation's biggest retailer, and it fails to crack the top half
in any of the six major areas. Financial literacy is also a major
problem in Arkansas, where the state ranks next to last in the
nation, hurting the ability of its residents to improve their
Residents in these areas are all too familiar with the
economic challenges they face. As you look at how
state performs, keep in mind that despite dealing with the
problems that every state and local government has to address,
you might be much better off than some of your compatriots.
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