Iowa ranks high in analysis of taxpayers’ return on investment

(The Center Square) – A new analysis by the personal finance website WalletHub ranks Iowa in the top 15 in the U.S. for taxpayers’ return on investment.

Although federal tax rates are uniform across the country, states receive different amounts of federal funding and state and local government tax rates vary across the country.

WalletHub, which released its 2020’s States with the Best & Worst Taxpayer ROI analysis Wednesday, sought to determine in which states do taxpayers get more for the taxes they pay.

To do so, the website contrasted state and local tax collections with the quality of the services residents receive within five categories: education, health, safety, economy, and infrastructure and pollution. WalletHub’s data set included a total of 31 key metrics.

Each metric was graded on a 100-point scale, with a score of 100 representing the best quality of government service. WalletHub determined each state’s weighted average across all 31 metrics to calculate its Overall Government Services core.

The taxpayer ROI rankings were determined by comparing each state’s Overall Government Services score to its Total Taxes Paid per Capita.

Iowa ranked 12th in the U.S. in taxpayer ROI, with a ranking of 32nd in Total Taxes Paid per Capita and eighth in Overall Government Services.

Within Overall Government Services, Iowa ranked sixth in economy, 10th in infrastructure and pollution, 10th in health, 11th in safety and 16th in education.

“There are over 89,000 separate cities, towns, villages, school districts and other special service units,” said Minchin Lewis, adjunct professor in the Department of Public Administration and International Affairs at Syracuse University’s Maxwell School. “They all collect taxes and provide services in one form or another. They all have different structures and external support from state and federal tax transfers. So high taxes do not guarantee good services. Low taxes do not mean unsatisfactory services.”

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