Pennsylvania ranks 26th in rate of return on federal taxes, analysis shows
(The Center Square) – Pennsylvania ranks 26th out of the 50 states when it comes to taxpayer rate of return, according to a new analysis.
The Keystone State is 24th in overall government services, according to personal finance website WalletHub’s Best & Worst Taxpayer Return on Investment for 2021 report.
WalletHub compared the 50 states across the areas of health, safety, education, economy and infrastructure and pollution.
“Local governments are funded differently in every state,” Dr. Jason Jolley of Ohio University said in the report. “Differences also exist between counties and cities. Some rely on local income tax and other states prohibit or limit local income taxes. Federal government assistance to state and local governments is critical until the economy begins to recover.”
Jolley said public welfare – especially Medicaid – and education usually comprise the largest percentages of state and local spending, he said.
As local governments are receiving fewer dollars from state governments in the post-Great Recession era, they need to raise revenue in other ways to deliver the same level of service.
He encouraged citizens to become more engaged in their local governments to have a voice in how money is spent.
Brian Nakamura, an assistant professor at Texas A&M University, added that citizens can determine their ROI based on several factors, with infrastructure and education being the easiest to identify and possibly the most relevant.
“When you drive roadways, the presence of potholes, faded crosswalk bars and striping, parks maintenance, graffiti, and public safety calls for service reflect key indicators of ROI,” he said.
Similarly, he encourages people to determine the number of K-12 and post-secondary educational facilities within their communities and looking for signs of adequate funding and investment in how well the buildings are maintained – especially physical education facilities – and the number of temporary classrooms.
“Tax Day can be a painful reminder of how much we have to invest in federal, state and local governments, though many of us are unaware of exactly what they give us in return,” WalletHub managing editor John Kiernan said in the report. “As a result, this creates a disconnect in the minds of taxpayers between the amount of money we should fork over on Tax Day (May 17 this year) – and how much we deserve in return.”
WalletHub’s Taxpayer Survey indicates that 222 million Americans think the government does not spend taxes wisely, especially during the COVID-19 pandemic.
The report included that taxpayers ranked higher in Republican-leaning states than in Democrat-leaning states with New Hampshire giving the best return and Hawaii the lowest, with Blue states overall getting a 21.20% rate compared to Red states at 29.80%.
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