NCPA - National Center for Policy Analysis

2015 States Most and Least Dependent on the Federal Government

July 27, 2015

The extent to which the average American\'s tax burden varies based on his or her state of residence represents a significant point of differentiation between state economies. But it\'s only one piece of the puzzle. What if, for example, a particular state can afford not to tax its residents at high rates because it receives disproportionately more funding from the federal government than states with apparently oppressive tax codes?

John Kierman writes that WalletHub found the following:

  • New Jersey was the least dependent on the Federal government while New Mexico was the most.
  • Louisiana, Virginia, Alaska, Florida and Maryland received the lowest direct payments per federal taxes paid, while Kentucky, South Carolina, Indiana, Wisconsin, and North Dakota received the most.
  • North Dakota, South Carolina, Florida, Virginia, and Alabama received the least amount of money in corporate grants per dollar of federal taxes paid, while Arkansas, Maine, Alaska, New York, and Vermont received the most.

Economically, Alaska, North Dakota, Wyoming, Connecticut and Delaware have the highest per capita GDP, while Alabama, West Virginia, Idaho, South Carolina, and Mississippi have the lowest.

Overall blue States are less dependent on the federal government than red states. The data show that there is a negative correlation between state tax level and federal dependency, meaning that as states tax less they appear to be more dependent on the federal government.

Source: John S. Kiernan, "2015\'s States Most and Least Dependent on the Federal Government," WalletHub.

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