By Chris Caraveo
Arizonans may not be receiving the most bang for their buck when it comes to funding the state government come tax time.
With Tax Day April 15, WalletHub recently released its latest analysis of the U.S. tax landscape, an in-depth look at the states with the Best & Worst Taxpayer Return on Investment in 2019.
Arizona is No. 24.
“Arizona’s overall government services rank is among the lowest in the country,” WalletHub Analyst Jill Gonzalez told the Daily News-Sun. “The state lacks in school system quality, and it has the third lowest public high school graduation rate, at 78%.
“In terms of health care, Arizona could use an increase in the number of hospital beds per capita, as it has less than two per 1,000 residents. Safety is another important issue the state needs to handle. Crime rate is among the highest nationwide, and so is the number of traffic fatalities.”
WalletHub used 30 metrics to compare the quality and efficiency of state-government services across five categories — Education, Health, Safety, Economy, and Infrastructure & Pollution — taking into account the drastically different rates at which citizens are taxed in each state.
New Hampshire has the best taxpayer return on investment, followed by South Dakota, Florida, Virginia and Colorado. Hawaii is last, with New Mexico and California just ahead of it.
In Arizona, 17% of residents live below the poverty line, and the state’s unemployment rate is almost 5%, the sixth highest in the nation.
“Another shortfall Arizona has is pollution,” Ms. Gonzalez stated. “The parks and recreation expenses per capita are very low, and air pollution is the third highest.”
Arizona pays the 7th lowest taxes per capita at just under $2,700, which Ms. Gonzalez said might explain its government services rank, and the shortfalls the state has in many areas.
“The same can be said about Alaska, as well,” she added, as the state’s residents pay the least taxes and has the lowest government services rank. “That is, the poor quality of government services is a direct consequence of the state paying the lowest amount of taxes in the country.”
However, states with higher tax burdens do not necessarily correlate to better services. That is the case with California, whose residents pay $5,211 in taxes per capita, but is No. 45 in government services.
“The state of California has heavy tax burdens, but the government services are inadequate,” Stacey Jurhree, coordinator at Eastfield College in Texas stated. “The state is full of tent cities and people are exiting the state by the thousands. We are having a great deal of them coming to the Dallas-Fort Worth area, where I live.”
New Hampshire, despite residents paying the second lowest taxes, is 7th in government services.
Despite its mid-pack ranking, Arizona is 5th when it comes to annual job-growth rate at 1.38%. It also fares well in life expectancy at birth (17th) and school voucher programs (15th).
David Schleicher, professor of law at Yale Law School, offered a plethora of advice to citizens looking to assess the ROI of their local and state tax dollars.
While he acknowledges that not everyone can sit down and look at every issue, Mr. Schleicher told WalletHub voters can ensure good returns on investment by supporting watchdogs of public finance — local newspapers, interest groups and think tanks — and electing legislators based on state issues, not on which party the legislator affiliates with at the national level.
“Voters generally use their votes in state elections to comment on national politics – voting for state legislators based on whether they are in the same party as Donald Trump or Barack Obama,” Mr. Schleicher stated. “But this encourages waste. State legislators know they will get re-elected no matter what they do, because voters will vote for them based on national issues, and so have little incentive to be careful with public money.”
Red (Republican) states have a higher taxpayer return on investment, according to the report, with an average ranking of 21.20. Blue (Democratic) states have an average ranking of 31.95.
“Overall, taxpayers in Red states get a better ROI,” Ms. Gonzalez stated. “This means the quality of government services in these states is higher, despite residents paying less taxes. This could mean authorities are more efficient in these states, and better at managing and investing the revenue they receive.”
For anyone not ready to file their taxes just yet, don’t fret. Extensions are available. However, people need to file it by the tax deadline of April 15. If approved, they’ll have until Oct. 15.
An extension only pushes back the due date for filing tax documents. It does not give extra time to pay any taxes owed.
People who believe they need to pay taxes need to estimate the amount after filing for an extension and make a payment by the April 15 deadline.
According to Promocodes.com, residents in Arizona are the fourth most-likely to receive an extension, trailing California, Colorado and Hawaii.
The benefits of tax extensions including taking advantage of retroactive changes to the tax law, having six more months to file, less stress, and avoiding failure-to-file penalties.
New figures Tuesday from the Arizona Department of Revenue show that more than 1.9 million returns already have been received out of what may be an estimated 3 million expected based on prior years, Capitol Media Services reports.