When I first read yesterday’s post at Reno & Its Discontents, I had two immediate thoughts:
- The correlation between Nevada’s taxes and the results we’re getting from our tax programs sure does line up nicely.
- How strong is the correlation between tax spending and results?
To help everyone out, here’s the chart that she references, courtesy of the Las Vegas Sun:

You have to admit - it looks pretty damning, doesn’t it? We spend in the 40s, we get results in the 40s in return. Looks pretty straightforward. However, life is rarely that simple; for example, crime rates are going to be higher in Nevada because they’re calculated on a per population basis, even though, at any given moment, the number of people in this state is going to be substantially higher than that, thanks to our burgeoning tourism industry. Las Vegas alone gets 40 million visitors a year - statistically, it’s a given that at least a few of them are committing violent crimes. Of course, I’m not the first person in the state to notice this: The Nevada Taxpayer Guide crunched the numbers and determined that 1 in 5 people in Nevada throughout the year are tourists, which means that our per-capita numbers are going to be about 20% higher than they would be without the tourists. So, for example, using the same FBI Uniform Crime Reports that the Las Vegas Sun is using, we find that the FBI calculates their crime numbers based on a reported population of 2,565,382. If we adjust for tourists using the Nevada Taxpayer Guide number of 249.4 million visitor-days per year, however, we find that Nevada has a statistical population of 3,248,669, which places our tourist population-adjusted crime rates at:
- Violent Crime: 592.8 (per 100,000 residents) - Still above the national average, but it brings us up from 48th to 43th.
- Property Crime: 2,983.3 (per 100,000 residents) - Actually below the national average, and brings us up to 22nd.
Now, violent crime is still awfully high, but suddenly our property crime numbers look a little more tolerable. That said, this isn’t really the angle I want to pursue. Yes, some of the numbers for Nevada, like any other tourism-heavy state, are going to be a little skewed if calculated from a pure per-capita population basis. How many of those suicides, for example, are Nevada residents? The bigger question is this: How tight is the correlation between tax revenues and program results? To answer this question, we first need to get some tax revenue numbers, which means hitting the same source that the Las Vegas Sun hit - the Tax Foundation. According to their tax burden worksheet, the top 10 most taxed states are:
- New Jersey
- New York
- Connecticut
- Maryland
- Hawaii
- California
- Ohio
- District of Columbia
- Wisconsin
- Rhode Island
So, just using the crime statistics mentioned above, how do these 10 fare?
- New Jersey: 23th in violent crime, 6th in property crime
- New York: 28th in violent crime, 5th in property crime
- Connecticut: 11th in violent crime, 11th in property crime
- Maryland: 44th in violent crime, 32nd in property crime
- Hawaii: 13th in violent crime, 49th in property crime
- California: 39th in violent crime, 24th in property crime
- Ohio: 26th in violent crime, 33rd in property crime
- District of Columbia: 52nd(last!) in violent crime (includes DC and Puerto Rico), 52nd in property crime
- Wisconsin: 18th in violent crime, 19th in property crime
- Rhode Island: 7th in violent crime, 17th in property crime
Now, we’re going to have to ignore the District of Columbia - no state is composed entirely of an urban area, so it’s going to be a bit of a statistical anomaly anyways. Also, since Hawaii has a rather healthy tourism industry, we can probably assume with some measure of certainty that their crime numbers are going to be a little high. Even with those data points out of the mix, however, we can still see that, if there’s a correlation between crime and tax load, it’s pretty weak, especially with regards to violent crime. To help illustrate this, let’s go the other way (ignoring Puerto Rico):
Three of the states with the lowest violent crime rates in the country are also in the bottom five in overall tax rate, which pretty well sinks any causational link between tax rates and crime. In fact, a quick look of the list reveals something far more interesting - they’re each in geographical clusters. You have New England (Maine, Vermont, New Hampshire, Connecticut, Rhode Island), the Dakotas, and a chunk of the Rocky Mountains (Utah, Wyoming, Idaho). This implies that there may be more of a link between violent crime and demographics than there is between violent crime rates and tax load.
All right, you might be thinking, perhaps crime isn’t the most illustrative example of how you get what you pay for. What about education? Well, let’s use the same statistics the Las Vegas Sun used, which means taking a trip to the National Center for for Education Statistics. For student/teacher ratio, we find that the top 10 states are:
- Vermont (10.8), 8th highest tax load
- Maine (11.5), 15th highest tax load
- Virginia (11.6), 18th highest tax load
- North Dakota (12.1), 33rd highest tax load
- New Jersey (12.4), higest tax load in the country
- Wyoming (12.6), 48th highest tax load
- New York (12.8), 2nd highest tax load
- New Hampshire (13.1), 46th highest tax load
- Massachusetts (13.2), 23rd highest tax load
- Alabama (13.2), 38th highest tax load
The relationship between tax load and class size is certainly a little firmer than it was for violent crime, but not by much - it’s clear that, if you throw lots of money at the problem, like New York and New Jersey, you can make some headway, but it’s certainly not necessary, and it may not necessarily help. California, for example, is third from last with a student/teacher ratio of 20.9, just ahead of Oregon (21.3) and Utah (22.1).
Ah, you’re thinking, what about results? Who cares about class sizes? Talk to me about graduation rates! Okay, let’s talk graduation rates. The top ten lowest dropout rates in 2008 were:
- Connecticut (1.8%), 3rd highest tax load
- New Jersey (1.8%), highest tax load in the country
- North Dakota (2.0%), 33rd highest tax load
- Iowa (2.1%), 31st highest tax load
- Kansas (2.2%), 21st highest tax load
- Indiana (2.5%), 28th highest tax load
- Maine (2.7%), 15th highest tax load
- Vermont (2.8%), 8th highest tax load
- Nebraska (2.8%), 17th highest tax load
- Virginia (2.8%), 18th highest tax load
Here, again, the correlation is a little stronger, but it’s still not a slam dunk - many of the states are in the middle of the tax pack or, at worst, slightly above it. Meanwhile, if we take a look at the rest of the top 10 taxed states that aren’t in the list above, we find New York at 42nd with a 5.6% dropout rate (note that, according to these numbers, we’re at 43rd, not the 42nd that the Las Vegas Sun has us at), Maryland at 30th (4.1%), Hawaii at 36th (4.8%), California at 17th (3.3%), Ohio at 19th (3.3%), and Rhode Island at 24th (3.4%). In short, high taxes does not necessarily lead to lower dropout rates.
With enough time, I’m certain that I could dig through more and more data and find the same thing - if there’s a correlation between tax load and government services provided, it’s not anywhere near as strong as many people would like us to believe. The reasons are both obvious and multitudinous. Health and education statistics are more about demographics than monetary outlays - if your citizens are broke (Maryland, with an emphasis on Baltimore), it’s not going to matter how much you bring in to your coffers or how high you tax your citizens, you’re still not coming out ahead. The more expensive the state is to live in, the higher the tax load will need to be to provide the same level of services as another state - this is why Wyoming and New Hampshire, for example, can have low tax rates yet still receive high marks in program statistics, while New York and California are near the bottom. Of course, tax rates are a factor in a state’s cost of living - the more you tax, the more people have to make to enjoy the same standard of living as a less taxed individual. In short, “you get what you pay for” is a simplistic sentiment at best and completely misguided at worst.
To drive the point home…
- Why is our student/teacher ratio so high? Because people move into this state faster than we can build schools and hire teachers. As long as that’s the case, it’s not going to matter how much money we throw at the problem - we’re still going to have higher than average student/teacher ratios. The only way around this is if we try to build faster than our growth rate, in which case we may overbuild and find our education dollars going towards maintenance on a bunch of facilities we don’t need instead of actually teaching students. It’s a balance, and, with the way our state grows, one that’s very hard to get right.
- Why is our high school dropout rate higher than the national average? Because many of the students that show up in our high schools aren’t from here. It doesn’t matter how much money we throw at this problem - if you’re dealing with a bunch of high school-aged kids that move into a school district and suddenly find themselves “behind” because their school district teaches courses in a different order than ours does, you’re going to lose a few through the cracks. I saw it happen quite frequently when I was in high school, and, believe me, all the teachers and the counselors in the world would not have helped.
- Why is our post-secondary education rate so abysmal? This one is easy - because Nevada doesn’t have a lot of jobs that call for a college degree. College graduates go where the jobs are. Guess what? Most of Nevada’s jobs are non-skilled, tourist-oriented, low-paying jobs that most college graduates aren’t going to settle for. Instead, they’re going to move to states that have jobs for them. Consequently, those states will have higher post-secondary education rates. Want to fix this? Spending more money in the college system might help - what will help more is encouraging high skill jobs to come to Nevada so college graduates will want to stay or move here.
- Why is our suicide rate so high? We’re a state that receives a bunch of tourists who gamble lots of money. Some of them don’t fare so well. Three guesses how that will affect our numbers. Also, guess how much suicide prevention money will help solve this. Hint: The answer is not at all.
- Percentage of uninsured? This one is also easy - remember what we covered with our college graduates? Good jobs = good benefits = high post-secondary education rates and lower percentage of uninsured. Poorly paying jobs = terrible benefits = low post-secondary education rates and a higher percentage of uninsured. Higher taxes will help with this how?
I think I’ve made my point.