New York receives a low rate of return on federal taxes, analysis shows

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New York ranks 44th out of the 50 states when it comes to taxpayer rate of return, according to a new analysis.

The Empire State is 26th most-dependent on those taxes and 19th in overall government services, according to personal finance website WalletHub’s Best & Worst Taxpayer Return on Investment for 2021 report.

New York is one of several states with financial challenges even before the COVID-19 pandemic, which is receiving particular attention when it comes to stimulus payouts, according to William Gorman, Monmouth University history professor, in comments shared by WalletHub.

“These are states, that when compared to other states, have a much higher budget and rate of expenditure,” he said. “This can certainly be tied to factors like size and population which would be an obvious expectation.”

WalletHub compared the 50 states across the areas of health, safety, education, economy and infrastructure and pollution.

John Kiernan, WalletHub managing editor, said in the report that federal taxes and support are only part of the story.

“Different states have dramatically different tax burdens,” Kiernan wrote. “This begs the question of whether people in high-tax states receive superior government services.”

Gorman noted that when looking at the size of states and relative populations, a state like California benefits greater than some others when comparing the amount received versus amount actually paid.

Gorman cited a 2018 statistical data shown in U.S. News and World Report wherein New York paid $22 billion more than it received in resources from the federal government.

“From a standpoint of fairness, it can be argued that there should maybe be a system that a bit more equitable for revenue that one state contributes versus the amount it gets back in resources or benefits of an economic nature of the federal government.”

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 indicated 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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