The federal government’s system of taxing and spending works out well for people in states like New Mexico, Mississippi, West Virginia and here in Arizona.
Not so well for those in Delaware, Minnesota and New Jersey.
New Mexico received $3.10 in federal spending for every tax dollar the state sent to Washington in 2005 — more than any other state — according to an Associated Press analysis of new federal data.
Delaware fared the worst, receiving just 42 cents for every tax dollar sent to Washington. It was followed closely by Minnesota, which got 46 cents, and New Jersey, 57 cents.
Arizona received $1.53 in federal spending for every dollar collected in taxes.
In all, 30 states and the District of Columbia received more money from the federal government than they paid in federal taxes.
No wonder there’s a federal budget deficit.
“I don't get all worked up that Minnesota only gets 46 cents back. I get worked up about the lack of accountability,” said Lynn Reed, executive director of the Minnesota Taxpayers Association, which advocates for a more transparent tax system.
“You could write into law that every state should get at least 80 cents back, but that’s dumb,” he said. “It’s inefficient.”
The Census Bureau released its annual report on 2005 spending by the federal government on Oct. 9. It documents the geographic distribution of $2.3 trillion in government spending, including salaries, grants, military pay, government contracts and Social Security payments. It excludes interest on the national debt, overseas spending and the classified budgets of intelligence agencies.
The AP compared the census data to previously released IRS figures for 2005 federal tax collections. The IRS data includes individual, corporate and excise taxes.
Analysis: Blue states subsidize red ones
The analysis shows that wealthy states pay more than poor ones, blue states subsidize red states, and states with powerful politicians on key House and Senate committees fare well in federal spending.
High-income states like New Jersey, Connecticut and Massachusetts paid more in taxes than they received in federal spending, while low-income states like Mississippi, West Virginia and Alabama got a much higher return for their tax dollars.
The exceptions were Alaska, Hawaii, Virginia and Maryland — high-income states that also received high levels of government spending.
Scott Hodge, president of the Tax Foundation, a Washington research group, said the numbers represent a massive redistribution of the nation’s wealth.
“I don’t think the tax code should be used to redistribute wealth around the country,” Hodge said. “It should simply be a tool to pay for government programs.”
Why not redistribute wealth? asked James Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities, a Washington think tank.
“I think it is appropriate for people doing well to pay a higher share of their income (in taxes) than those at the bottom,” Horney said.