Twenty years ago, Senator Daniel Patrick Moynihan, Democrat of New York, first called attention to the federal balance of payments. This term refers to federal taxes and spending in the 50 states and their net position. Moynihan was concerned that New York was sending considerably more in taxes to Washington each year than the state received in spending. He concluded that federal fiscal policy was "systematically deflating the economy of New York."

In the years since, Senator Moynihan has continued to issue a report each year on the federal balance of payments. The latest report was recently issued by his office (see figure).

• It shows New Mexico being the biggest winner and New Jersey being the biggest loser.

• The former received $3,262 more per capita in federal spending last year than it paid in taxes, while the latter paid $1,915 more in taxes per capita than it received in spending.

• As in 1977, New York was still in a net negative position, paying $773 more in taxes per capita than it got in pending.

When Senator Moynihan first raised this issue, it was roundly rejected by the Carter Administration. Council of Economic Advisors Chairman Charles Schultze pointed out that the main difference in state balances of payments was due to progressivity of the federal income tax. Those who earn more generally pay more. Thus residents of high-income states like New Jersey tend to pay more taxes than residents of low-income states like New Mexico.

According to the Census Bureau, in 1996 New Jersey had a median household income of $46,345 -- second highest in the U.S.-- and New Mexico had an income of just $25,922 --second lowest.

Another problem is just calculating flows of federal taxes and spending. It obviously makes no sense simply to look at where federal tax returns are filed in calculating federal tax burdens by state, since the actual burden of the tax may fall elsewhere. For example, the state of Michigan does not bear the sole burden of federal taxes paid by General Motors. The same problem exists for spending. A defense contract to Boeing does not only benefit the citizens of Washington, because much of the money will actually be spent on suppliers in other states.

For these reasons, most experts are very skeptical about comparing federal taxes and spending by state. "To rely on such data could give a distorted picture of comparative federal-state fiscal relations and may produce misleading and erroneous conclusions," states a report from the Congressional Research Service. After 20 years, perhaps it is time for Senator Moynihan to finally sunset his study.