Recs

0

These States Get the Most and Least Help From Uncle Sam

The extent to which the average American's tax burden would vary 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's receiving disproportionately more funding from the federal government than states with apparently oppressive tax codes? That would change the narrative significantly, revealing federal dependence where bold, efficient stewardship was once thought to preside.

The idea of the American freeloader burst into the public consciousness when #47percent started trending on Twitter. And while the notion is senselessly insulting to millions of hardworking Americans, it is true that some states receive a far higher return on their federal income tax investment than others.

Just how pronounced is this disparity, and to what extent does it alter our perception of state and local tax rates around the country? WalletHub sought to answer those questions by comparing the 50 states and the District of Columbia in terms of three key metrics: return on taxes paid to the federal government, federal funding as a percentage of state revenue, and number of federal employees per capita.

Source: WalletHub.

Rank (1 = Least Dependent) State Return on Taxpayer Investment 
(Category Rank)
Funding As % of Revenue 
(Category Rank)
Federal Employees Per Capita 
(Category Rank)
1 Delaware $0.50
(1)
25.37%
(7)
6.17
(10)
2 Illinois $0.56
(3)
26.23%
(8)
6.45
(11)
3 Minnesota $0.56
(2)
28.47%
(12)
5.91
(8)
4 New Jersey $0.88
(10)
27.53%
(11)
5.75
(6)
5 Connecticut $1.28
(25)
23.68%
(4)
4.91
(1)
6 Kansas $0.71
(6)
27.21%
(9)
9.19
(31)
7 California $0.94
(14)
28.82%
(13)
6.65
(13)
8 Nevada $1.15
(23)
27.48%
(10)
6.60
(12)
9 Massachusetts $0.94
(13)
29.56%
(17)
7.09
(19)
10 Colorado $0.84
(8)
29.24%
(15)
10.67
(35)
11 New Hampshire $1.07
(18)
32.06%
(21)
5.61
(4)
12 Michigan $1.08
(19)
34.12%
(25)
5.33
(3)
13 Ohio $0.66
(5)
35.87%
(36)
6.78
(15)
T-14 Utah $0.86
(9)
31.65%
(20)
12.58
(40)
T-14 Nebraska $0.57
(4)
34.92%
(31)
9.06
(28)
16 Washington $1.05
(17)
29.38%
(16)
10.73
(36)
T-17 District of Columbia $1.15
(22)
23.90%
(5)
336.63
(51)
T-17 New York $0.79
(7)
37.74%
(41)
6.06
(9)
T-17 Iowa $1.12
(21)
34.85%
(29)
5.75
(5)
20 Wisconsin $1.68
(38)
28.93%
(14)
5.08
(2)
21 Alaska $1.42
(31)
20.01%
(1)
22.68
(48)
22 Arkansas $1.1
(20)
34.52%
(28)
7.01
(17)
23 Pennsylvania $1.31
(27)
30.91%
(18)
7.87
(24)
24 North Carolina $1.34
(28)
33.91%
(24)
7.22
(20)
25 Indiana $2.01
(41)
33.20%
(23)
5.76
(7)
26 Virginia $1.75
(39)
24.81%
(6)
21.52
(47)
27 Oklahoma $0.9
(11)
36.21%
(38)
12.78
(41)
28 Oregon $1.28
(26)
36.16%
(37)
7.26
(21)
29 North Dakota $5.31
(50)
21.04%
(2)
13.70
(44
29 Hawaii $3.19
(46)
23.60%
(3)
25.32
(50)
31 Idaho $1.4
(29)
35.16%
(33)
7.96
(25)
32 Texas $1.43
(32)
35.13%
(32)
7.77
(22)
T-33 Rhode Island $1.55
(34)
34.48%
(26)
9.80
(32)
T-33 Georgia $1.05
(15)
38.86%
(44)
10.44
(34)
35 Vermont $1.41
(30)
34.86%
(30)
10.38
(33)
36 Missouri $1.05
(16)
40.83%
(47)
9.19
(30)
37 Maryland $1.61
(35)
31.29%
(19)
25.06
(49)
T-38 Wyoming $0.91
(12)
39.73%
(46)
13.17
(42)
T-38 Florida $4.57
(49)
32.65%
(22)
6.96
(16)
40 South Carolina $7.87
(51)
34.49%
(27)
7.03
(18)
41 Kentucky $2.39
(43)
35.83%
(35)
9.10
(29)
42 Arizona $1.62
(36)
39.35%
(45)
8.71
(27)
T-43 South Dakota $1.16
(24)
41.53%
(49)
13.95
(45)
T-43 West Virginia $2.22
(42)
35.46%
(34)
12.56
(39)
45 Tennessee $1.64
(37)
41.27%
(48)
7.82
(23)
T-46 Montana $1.55
(33)
38.54%
(43)
13.53
(43)
T-46 Maine $1.79
(40)
36.63%
(39)
10.92
(37)
48 Louisiana $3.35
(48)
44.26%
(50)
6.76
(14)
49 Alabama $3.28
(47)
37.02%
(40)
11.66
(38)
T-50 New Mexico $2.83
(44)
37.90%
(42)
15.22
(46)
T-50 Mississippi $3.07
(45)
45.84%
(51)
8.67
(26)

Time to tame your tax bill
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 01, 2014, at 12:10 AM, predfern wrote:

    Every dollar that the federal government sends to a state is taken from taxpayers in that state and other states. It is no different if the tax dollars go to another state instead. The return is less than one because the federal bureaucracy takes its cut. In the long run this leads to more government spending since federal seed money creates a demand for more government.

    How Much Does Your State Government Depend on Federal Funds?

    http://www.downsizinggovernment.org/how-much-does-your-state...

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2976062, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:06:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

WalletHub
wallethub

WalletHub is a leading personal finance social network that helps consumers save money on their credit cards, car insurance, bank accounts, mortgages, and many more financial products.

Today's Market

updated 4 hours ago Sponsored by:
DOW 17,042.90 -28.32 -0.17%
S&P 500 1,972.29 -5.51 -0.28%
NASD 4,493.39 -12.46 -0.28%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Advertisement