WASHINGTON (TND) — A recent survey by personal finance website WalletHub shows that 73% of Americans think that the government does not spend their tax dollars wisely.
Breaking down the numbers, 26% of people said their local government and 22% said their state government would be the best receipients of their tax dollars, compared to 16% who advocated for the federal government's use of tax dollars.
Furthermore, 39% of Americans said they would want to move to a different country in order to pursue a tax-free future.
For a small business owner in Illinois, the sentiment is familiar.
Christopher Gibbs and his wife Paula Delores own The Melanated Bar, a natural skincare company, now in its seventh year of business.
The couple recently celebrated a major milestone by earning one million dollars.
However, they say they have not had the easiest road to that financial achievement, especially by having to navigate Illinois' tax system.
"It's extremely difficult navigating, because you want to make sure you're doing the best on behalf of your business," Gibbs said. "Understanding that I needed to make more money so that I'm not affected by taxes, but the more money I make, the more taxes I pay, and so now I’m looking for those deductions."
He's so frustrated that he and Delores are talking about moving themselves and their business to a hopefully more tax-friendly state like "Texas, Georgia, Florida or Indiana."
According to WalletHub, Illinois – which has an individual income tax rate of 4.95% and a corporate income tax rate of 9.5% – is in the bottom half of U.S. states when looking at taxpayers' return on investment (ROI).
The website published a study Tuesday that delineated states' overall tax payer ROI by comparing and contrasting the amount of taxes paid per capita in each state with quaility of five categories of government services: Education, Health, Safety, Economy, and Infrastructure & Pollution.
Illinois ranked 36, with the 11th highest taxes paid per capita by citizens compared to being 21st in providing superior government services. New Hampshire ranked number one for taxpayer ROI and California ranked dead last.
"States with higher tax burdens do not necessarily provide better government services," said Jill Gonzalez, a WalletHub analyst. "That, of course, is ideally what we all would want, you know, we want to be having that sense of getting what we paid for. But that's not always the case, as we see in states like California, Hawaii, and Oregon: [they] all have pretty high tax rates, but subpar government services."
Following New Hampshire, the top five states for taxpayer ROI are rounded out by Florida, Alaska, South Dakota and Texas; Hawaii, New Mexico, Arkansas and Delaware rank just above California in the bottom five. Both Florida and Texas do not have an individual income tax.
The study also suggests that Red states have better returns on average than Blue states (noting 'red state' and 'blue state' here refers to how states voted for president in the 2020 election), with GOP-leaning states averaging a rank of 21.5 and Democrat-leabing states averaging a rank of 29.5.
The breakdown simplifies like this, according to Gonzalez: "In South Carolina, for instance, for every dollar that you're giving to the federal government, you're getting about three times that back in return. [But] in the Northeast, you're getting anywhere from 30 to 80 cents back on the dollar.
Granted, Gonzalez notes that what constitutes effective and proper spending of taxpayer dollars on government-rendered services can be a subjective issue at times.
Say, for example, there is a new arena or stadium going up in your state.
"That is usually something having to do with taxpayer dollars being allocated to the build of that, whereas it could be used for schooling, or for health care," she notes. "Now, if you're a big sports fan, you might say, 'Hey, this is a great use of taxpayer dollars!' So ,that is where it does get a little bit more subjective."
Ultimately, Gonzales says that one of the major drivers of allocating tax dollars – and the answer to the question of how local, state and federal government spend taxpayer money – comes down to the ballot box. But specifically, these government purse issues come down to voting on a local level.
"If you're not voting in your local elections, that might be something to consider," she explains. "A lot of this does come down to things that we vote for: whether it is a new stadium or better quality daycare."
