Tax Dollar Performance in Nevada

A Quantitative Analysis of the Effectiveness of Government Spending in the Silver State

By Geoffrey Lawrence
  • Tuesday, February 24, 2009

Key Findings

  • 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.

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