Federal Distributions Vary from State to State
January 20, 2004
The federal government redistributes more wealth to North Dakota and New Mexico than other states, according to the Tax Foundation and the Kennedy School of Government. 2002 Census data revealed that for every dollar paid by these states' taxpayers, each state received over $2.00 in federal money.
- New Mexico received $2.37 from the federal government for every dollar paid by the state's taxpayers; North Dakota received $2.07 for every $1.00 paid by taxpayers.
- Alaska ($1.91), Mississippi ($1.89) and West Virginia ($1.82) followed closely behind, with Alaska's spending-to-tax ratio increasing more than any other state's over the past ten years.
- Although not a state, D.C. by far received the largest share of federal entitlements at $6.44 for every dollar paid by its taxpayers, which amounts to $58,347 per every adult and child in the district.
- New Hampshire (66 cents) and Connecticut (65 cents) also ranked among the bottom in spending-to-tax ratios.
- Colorado's spending-to-tax ratio has declined dramatically from $1.06 to 1992 to 78 cents in 2002.
Scott Moody, Senior Economist for the Tax Foundation attributes demography, as well as politics for such unequal distribution. States with more federal employees naturally incur more federal spending, as well as states with a higher number of citizens on Social Security, Medicare and other entitlement program.
Also, states with higher per capita incomes and more progressive tax structures, such as Connecticut, will pay more in taxes while receiving less in federal money.
Sources: Scott Moody, "Dealing with Uncle Sam," Budget and Tax News, December 2003, Heartland Institute.
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