The Red State Paradox: Which States Rely Most on Federal Funding?

John Tierney highlights one of the “most interesting maps” from Wallet Hub:

“The Wallet Hub analysts essentially asked how much each state receives back as a return on its federal income-tax investment.  They compared the 50 states and the District of Columbia on three metrics: 1) federal spending per capita compared with every dollar paid in federal income taxes; 2) the percentage of a state’s annual revenue that comes from federal funding; and 3) the number of federal employees per capita.  The third measure received only half the weight of each of the others in the calculation.”

Mississippi and New Mexico top the list of “most dependent” states.


“It’s not just that some states are getting way more in return for their federal tax dollars, but the disproportionate amount of federal aid that some states receive allows them to keep their own taxes artificially low. That’s the argument Wallet Hub analysts make in their 2014 Report on Best & Worst States to be a Taxpayer.”

Also: The reddest states (Mississippi, Alabama, Louisiana, New Mexico, Maine) “have exceptionally high poverty rates and thus receive disproportionately large shares of federal dollars.”

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  • Tom

    Maine and New Mexico are not “red states” by any stretch of the imagination. I have lived and voted in both states. Maine is almost entirely a welfare state, for reasons of industrial collapse. New Mexico simply has no population and since the national labs, testing/proving grounds, and military has a much larger impact than most. That’s hardly surprising. Welfare is a major expense in NM, but the factors are much different from the “real” red states.

    • Gregory Williams

      NM has a thug lord style red state extremist conservative republican governor and Maine does not leach off of the rest of the nation – I do not know why they were listed in the article like that, possibly the author mistook the abbreviated designation for another state to be that of Maine.

      • Tom

        Ok, one Governor in a snapshot of time makes a state red. Who knew?

  • pitch1934

    Here’s a plan that will set things right. Make it so that no state can get more than 105% of what it sends to the Federal government in taxes. I would love to hear what Alabama, Mississippi, etc. would have to say about that.

    • tom

      They would just cut off all the indigent black people along with the indigent white people to boot. The indigent whites would then go crying to their churches who would surely help them. Same for the blacks.

  • DKDC

    Federal largesse allows many of the red states to pretend to be conservative and keep state taxes low. Many of these states also push the tax burden down to the local level as well. It’s a sham that many of these states market themselves as low tax bastions of liberty.

    I think they are due a taste of their own conservative prescription.

  • Yonatan YONATAN

    Those people who think that the unemployed are “lazy”, and prefer collecting unemployment benefits, have no clue of the reality facing these families. Most of these people had long term employment, and had families to support. The majority of them are “older” Americans, who had worked for many years, paying into the system, should they become unemployed, and needed financial assistance. These workers through no fault of their own, found themselves victims of corporate downsizing, and were laid off from their jobs. Given the current economic recession, they have had a particularly difficult time finding employment. Also, many companies are not motivated to hire “older” workers, due in part of the higher cost of health care insurance for older workers. Older workers, just on the basis of their age, would be placed in a “higher risk” group, which would affect the potential employer’s bottom line cost. As we all know, it’s all about profit and “the bottom line”. Since last December, more than 2.6 million workers have been without unemployment benefits. The republican senate has held the extension bill “HOSTAGE”, in the hopes of getting the XL Oil Pipeline passed by the president. This has NEVER been about these unfortunate families, but only about pleasing the lobbyist for whom they truly serve. While the republicans continue playing “party politics”, and using these families for political leverage, and as bargaining chips, these families have had to face evictions, home foreclosures, personal bankruptcy, and homelessness. Most of them have watched their credit being destroyed, because of lack of money to pay their bills on time, or at all. How many more families have to become homeless and destitute before the senate finally PASSES the extension bill? This truly is a national crime against the American family. While the politicians live their affluent and privileged lifestyles, with all the perks of office, these families continue to suffer and struggle to eat and to live

  • danguisugly

    That ‘ol federal employee issue is pretty misleading and destroys the entire data set.

  • tom

    The southern states have high percentages of indigent blacks who vote almost exclusively Democrat. The reason they are GOP is because most of the whites vote GOP. WVa is a coal state, Obama’s nemesis. The biggest city in Indiana is Gary! Their version of Detroit. New Mexico has a lot of Indian tribes, again a large block of welfare recipients.

    New York, Chicago and California are great financial centers. So they have a lot of very wealthy people who skim off the entire region like locusts for hundreds of miles to create a high tax base. And who can balance off the high numbers of welfare people. But we can’t turn the entire country into banking and insurance capitals, can we?

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