NCPA - National Center for Policy Analysis

Northern And Midwestern States Tax Dollars Aid The South

October 8, 1996

A new study from Harvard University's Kennedy School of Government shows that more federal dollars are flowing to Southern states at the expense of Northern and Midwestern states. Factors drawing money to states range from military bases and defense industry to high levels of welfare relief.

  • Connecticut leads the list of states which paid more to the federal government in taxes than they received in federal spending -- $2,099 less per capita last year.
  • Washington, D.C. was the biggest winner, gaining $30,817 for each resident -- followed by New Mexico, which received $3,300 more per capita in federal spending than residents paid to Washington in federal taxes.
  • New Jersey, Illinois, Delaware, Minnesota, Michigan, New Hampshire, Nevada and Wisconsin joined Connecticut among the top losers -- paying between $1,000 to $2,000 more per capita in federal taxes than they received in federal spending.
  • Top winners also included Virginia, Mississippi, West Virginia, North Dakota, Montana, Maryland, Alaska and Kentucky -- receiving roughly $1,400 to $2,700 more per resident than their tax bill.

Within the last decade there have been significant changes for the worse for Massachusetts, New Hampshire, Vermont, California, Hawaii and Washington. According to the study, factors which influence the distribution include the presence in a state of military facilities, whether the state attracts retirees receiving Social Security payments, per capita income levels and poverty rates.

Source: Robert Pear, "North and Midwest Dollars Aid the South," New York Times, October 8, 1996.


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