The Tax Foundation has released its annual report, Federal Tax Burdens and Expenditures by State. Here is the Executive Summary:
The Tax Foundation’s annual federal tax burden and expenditure study clarifies the geographical patterns of income redistribution that federal tax and spending policies cause each year. The results of the study have been controversial for years because they show that the nation is not only redistributing income from the prosperous to the poor, but from the middle-income residents of high-cost states to the middle-income residents of low-cost states.
Thanks to a steeply progressive federal income tax, states with higher incomes pay vastly higher federal taxes, payments that are unlikely ever to be matched by federal spending directed to those states. Ironically, most of these high-paying states are the so-called blue states that have generally elected politicians who support a more steeply progressive tax system even though their own constituents bear a greater share of the burden as the code gets more progressive.
All categories of federal taxes, including income taxes on individuals and businesses, social insurance taxes, excise taxes, estate and gift taxes, customs duties and all other taxes, are tabulated and the total tax burden of each state is determined. This figure is compared to the flow of federal funds back to each state, bringing the two sides of federal fiscal operations together.
Here are the 10 biggest winners (who receive the most federal expenditures per dollar of federal taxes paid) and losers (who receive the least federal expenditures per dollar of federal taxes paid):
|
Rank |
State |
Expenditure Per Dollar of Taxes Paid |
|
1 |
New Mexico |
$2.00 |
|
2 |
Alaska |
$1.87 |
|
3 |
West Virginia |
$1.83 |
|
4 |
Mississippi |
$1.77 |
|
5 |
North Dakota |
$1.73 |
|
6 |
Alabama |
$1.71 |
|
7 |
Virginia |
$1.66 |
|
8 |
Hawaii |
$1.60 |
|
9 |
Montana |
$1.58 |
|
10 |
South Dakota |
$1.49 |
|
|
Median |
$1.11 |
|
41 |
Colorado |
$0.79 |
|
42 |
New York |
$0.79 |
|
43 |
California |
$0.79 |
|
44 |
Massachusetts |
$0.77 |
|
45 |
Nevada |
$0.73 |
|
46 |
Illinois |
$0.73 |
|
47 |
Minnesota |
$0.69 |
|
48 |
New Hampshire |
$0.67 |
|
49 |
Connecticut |
$0.66 |
|
50 |
New Jersey |
$0.55 |
See also the Tax Foundation’s News Release.
3 responses to “Tax Foundation Releases 50-State Ranking of Federal Expenditures Per Dollar of Tax Paid”
I don’t get the big deal. Individuals often pay more tax than they get in return in the form of government services. Why should states be treated any fairer?
I believe that corporate taxes paid by corporations with principal offices in New York are claimed to be taxes paid by New Yorkers. Also, I think that taxes paid by corporations with principal offices in New Jersey ( and that includes many of the highly profitable pharmaceutical companies ) are treated as taxes paid by New Jersians . This makes the table meaningless, but very helpful to pandering politicians.
NJ Annuitant:
I don’t find it meaningless. Did you review Table 4 of the Tax Foundation’s report? Indeed, you correctly assert that states are credited for corporate income taxes paid within the state, but the widest disparities among states are attributable to individual income and payroll taxes, not corporate income taxes. Among the 50 states, Connecticut has the highest per cap. corp. income tax ($890), whereas Mississippi has the lowest ($439). In contrast, Conn’s per capita individual income and payroll taxes are $5,590 and $3,592, respectively, while Miss’s is $1,442 and $1,828, respectively. Conn. pays $451 more in corp. income taxes, but $5,912 more in individual income taxes and payroll taxes. This makes sense, since folks in Conn. earn much higher incomes, but are subject to the same Fed. income tax law. BTW, who is pandering? How are they pandering?