Comparative Federal Tax Contribution by State

What Schneed10 is correct. In the interest of discloser the reason why I spend time looking at these numbers was not because I have too much time but because some people really do think kicking states like California out of the union is a good idea. I also wanted to see whether Temple was really paying his full bill if all things were equal.

Note that each "state" except for Puerto Rico can self-sustain especially when you factor in state taxes into the picture. Drag Index is a bit incendiary word but I couldn't think of a better word. Obviously each state has something unique to offer the union but let's not kid ourself, the big boys make this nation a super power. I mean Cali has a negative DI but kicking them out of the union would not be wise at all.

Thanks for the suggestion Schneed10. There's lots of numbers (GDP, SS payment, unemployment percentage, factor in corporate tax contribution into the picture, etc) worth looking at to make this analysis more meaningful. It's a working progress.

p.s. I was really surprised by how significant the contributions from Minnesota, Ohio, and D.C. were.

LOL on the bolded part.

It is very cool what you're doing here, I've never looked at the numbers by state like this.

DC doesn't surprise me so much, the housing within the district is very expensive which of course dictates that those living there need to make a lot of dough to afford it. With the DC area being one of the highest cost of living areas in the nation, the wage index matches, and you get a high per capita income.

But Ohio and especially Minnesota do surprise me. Minnesota's tax paid per capita is through the roof. I wonder if that's because the state is sparsely populated except for the areas surrounding Minneapolis-St. Paul. You might simply have the lion's share of people living around a metropolitan area that has a significant wage index.

Question, how is Federal Aid calculated? Is it welfare payments + disaster relief?

The Federal Aid data comes from census (http://www.census.gov/prod/www/abs/fas.html).
Federal government aid to state and local governments includes the following:

Direct cash grants to state or local government units.
Payments for grants-in-kind, such as purchases of commodities distributed to state or local government institutions (e.g., school lunch and breakfast programs).
Payments to nongovernment entities when such payments result in cash or in-kind services passed on to state or local governments.
Payments to regional commissions and organizations that are redistributed to the state or local level.
Federal government payments to state and local governments for research and development that is an integral part of the provision of public services.
Federal revenues shared with state and local governments.



Oh and the the tax data is from the IRS (http://www.irs.gov/pub/irs-soi/07db05co.xls).

I think that Federal Taxes paid is based on income so that explains some of your findings. FL has a large population of retired people who don't pay much in taxes and most of their income (beside SS) comes from money they have already paid taxes on.

I must ask. You think its fair that the richest 10% pay most of the federal taxes while the bottom 40% pay little to no fed taxes. Then you say its not fair that some states pay more then their share while others pay very little.

I think that Federal Taxes paid is based on income so that explains some of your findings. FL has a large population of retired people who don't pay much in taxes and most of their income (beside SS) comes from money they have already paid taxes on.

I must ask. You think its fair that the richest 10% pay most of the federal taxes while the bottom 40% pay little to no fed taxes. Then you say its not fair that some states pay more then their share while others pay very little.


I believe in the progressive tax wholeheartedly. It's the best system to sustain a capitalistic nation around the globe. I do look forward to, however, the day where we are all on equal footing and therefore pay equally into the system.

I believe in the progressive tax wholeheartedly. It's the best system to sustain a capitalistic nation around the globe. I do look forward to, however, the day where we are all on equal footing and therefore pay equally into the system.
How do you envision everyone achieving "equal footing"?
AND BTW, Schneed, you may want to seriously consider getting a.......woman

How do you envision everyone achieving "equal footing"?
AND BTW, Schneed, you may want to seriously consider getting a.......woman

LOL, I got one, and am raising another. I'm a financial analyst by trade, so this comes naturally.

How do you envision everyone achieving "equal footing"?
AND BTW, Schneed, you may want to seriously consider getting a.......woman

Through enlightenment? Through a disaster that wipes out 99% of the human population? F*ck if I know man, but it would be nice....then again man is a selfish and greedy animal and Cain is programed to to kill Able no matter the situation.

Through enlightenment? Through a disaster that wipes out 99% of the human population? F*ck if I know man, but it would be nice....then again man is a selfish and greedy animal and Cain is programed to to kill Able no matter the situation.
It wasn't a trick question Saden. I thought maybe you had a secret plan!
AND...Schneed, you......may be on the road to recovery. Back away from the spreadsheet!

I believe in the progressive tax wholeheartedly. It's the best system to sustain a capitalistic nation around the globe. I do look forward to, however, the day where we are all on equal footing and therefore pay equally into the system.

This will never happen and you will always have people who can't or are to lazy to be successful in life. The Federal Goverment and states have spent Billions trying to help people better there life with little success. We do live in a nation that if you set your mind to it you can become whatever you want. Clarence Thomas is a great example of a person who was born into poverty and now sits on the highest court. My parent old neighbor came from a family that had nothing and is now worth millions.

As I look through the work here, the biggest thing this tells me is the per capita income by state.

New York is the most effective taxpayer, even net of federal aid, because they have such a high number of citizens earning very high salaries. Wall Street, big corporate execs, investment bankers, consultants, employees of the accounting firms, media outlets, and on and on. These same citizens are the ones who generate a great deal of income and capital gains through their securities assets - this also generates tax for the federal government. It is these high earners that are contributing the lion's share of the tax money, as a great percentage of their income is taxed at the highest tax bracket, 35% or more.

New Jersey and Connecticut also rank high on the list for this reason. Many citizens from these areas commute into New York.

You'll note similar contributions amongst Massachussets (Boston, a large financial center), Illinois (Chicago). Then note poor states who are suffering most from economic troubles, Michigan's unemployment in the Detroit area pulls it down to one of the biggest drags.

Wage index also plays a huge role here. The states at the top of the list are high wage index states. An accountant coming out of college may start at 60K in NYC, and 40K in the south. Note the presence of South Carolina, Kentucky, Alabama, Mississippi, and Georgia near the bottom of the list. Cost of living in these areas is some of the lowest around, resulting in lower wages, resulting in lower taxes paid.

Florida is indeed an anomaly because of the retirees. They don't pay taxes on the social security checks they're drawing.

It is important that people not interpret this chart, particularly the drag index, as an indicator of one state doing more than another to fund the federal budget. It is not attributable to anything the state or the citizens are doing, it is merely reflective of:

- The geography of high paying jobs - where are the lion's share located? Major cities.
- The cost of living (and as a byproduct, wage index) of each state.

Unless you're a believer in a flat tax, one should expect New York to contribute more taxes on a per capita basis than any other state, simply because they make so much money. And it should be no surprise that California pays more than most states in taxes. They have way more people than most states and plenty of urban centers with high paying jobs, not to mention a booming tourism industry.

Saden, a very valuable analysis would be to add mean household income by state to the report, and then calculate (Gross Tax Paid - Federal Aid Received) / (Population x Mean Household Income). This would show you the percent of income paid to the federal government, net of aid. I'd postulate that you'll see a much more even distribution amongst the states.


Median data is available from the census and is preferred due to the fact that it's not sensitive to extremes like mean. Also, I don't understand the formula you gave. Can you clarify?