Tax Dollar Performance in Nevada >> Nevada Policy Research Institute

Tax Dollar Performance in Nevada

By Geoffrey Lawrence

The current state budget shortfall in Nevada has sparked a debate over whether to increase taxes. However, few attempts have been made to measure the effectiveness with which tax dollars are being spent in Nevada.
Quantitative analyses performed in this study provide empirical evidence suggesting that tax dollars are being spent quite ineffectively in Nevada. Indeed, across a range of performance measures, the quality of services may have deteriorated as tax rates have increased in Nevada.
There is at least limited evidence to suggest that for every additional $100 in per-capita tax revenues:
- Graduation rates decline by 0.37 percent while SAT scores improve by 0.81 points.
- The quality of healthcare deteriorates—to the tune of an additional 16.6 years lost to premature death per 100,000 in population.
- The crime rate increases by 0.64 percent over the national average.
- Nevada's national ranking of highway system performance falls by 0.5 places.
The ineffectiveness of state and local government to translate higher tax revenues into improved performance is likely due to structural deficiencies that fail to encourage efficiency.
The average quality of life in Nevada may improve if structural reforms are implemented to expose government agencies and their workers to market forces that encourage greater efficiency and effectiveness.