September 2, 2012 – - State Federal Spending versus Federal Taxes – Did Your State Gain or Lose: Some American States receive more in federal spending than they pay in federal taxes; others receive less. Over twenty years these fiscal transfers can add up to a sizeable sum. For example, from 1990 to 2009 (the latest years available), the federal government spent $1.44 trillion in Virginia but collected less than $850 billion in taxes, a gap of over $590 billion. However, relative to the size of its economy, Virginia derived a smaller benefit from America’s fiscal union than states like New Mexico, Mississippi and West Virginia, where the 20 year transfer exceeded 200% of their annual GDP (Gross Domestic Product). Transfers to Puerto Rico, which is a US territory not a fully incorporated state, exceeded 290%. Federal transfer payments to states consist of, Social Security, Medicare, Welfare, Unemployment Assistance, etc. In the Virginia example; the State paid $848B in taxes to the Federal Government and received transfer payments of 1,441B ($1.44T). Taxes minus spending were -$593B. Virginia GDP was $ 410B. Therefore, taxes minus spending as a percent of GDP were -145%. The top three winners, shown in dark green; were Delaware (+206%), Minnesota (+199%) and New Jersey (+150%). The bottom four, shown in red; were West Virginia (-241%), Mississippi (-254%), New Mexico (-261%) and Puerto Rico (-291%). These calculations are based on tax figures provided by the Internal Revenue Service and federal spending numbers provided by the Census Bureau. The chart above reflects the winners and losers. How did your State do?
The Master of Disaster