VOL. 41 | NO. 15 | Friday, April 14, 2017
Which state sends most taxes to DC? Hint: It's not a state
WASHINGTON (AP) — As Tax Day approaches, show some love for the good people who live in the nation's capital.
Washington, that swampy den of iniquity that politicians love to scorn, sends the most tax dollars per person to the U.S. government.
By a lot.
Last year, the District of Columbia paid Uncle Sam $37,000 per person in federal income, payroll and estate taxes. The next closest was Delaware, at $16,000 per person.
"It's where the money is," said Roberton Williams, a fellow at the Tax Policy Center. "The reason the District pays so much in taxes is that there are a lot of high-income people there."
Washington is an outlier because, despite years of lobbying, it is not a state. It doesn't even have a vote in Congress. It is, however, a city with a relatively high cost of living.
West Virginia, Mississippi and New Mexico have low median household incomes, which helps explain why they their residents pay far less in federal taxes. West Virginia paid $3,600 per person last year, while Mississippi paid $3,900 per person and New Mexico residents paid a little more than $4,000.
The Associated Press calculated each state's per-capita tax bill using data from the IRS and population estimates from the Census Bureau.
The deadline to file federal tax returns is Tuesday. It was pushed back because the usual April 15 deadline was Saturday, and because Monday is a holiday in the District of Columbia.
The IRS says millions of taxpayers have yet to file their returns. As they do, they shouldn't feel too bad for D.C. residents.
The nation's capital gets a good return on its tax investment. For every dollar the District sends to the federal government, it gets back almost $4, according to a 2015 study by the New York state comptroller.
For years, the late Sen. Daniel Patrick Moynihan, D-N.Y., would document that New York paid more to the federal government than it got back. In 2015, the state's comptroller took up the cause.
Washington's rate of return is higher than any state — most of it comes from wages for federal employees. The closest state is Mississippi, which gets back $2.57 in federal spending for every dollar it sends to Washington. New Mexico, West Virginia and Alabama are also big winners when it comes to federal taxes and spending.
These states are big takers because they have a lot of residents who get federal benefits, including Social Security, Medicare, Medicaid, disability benefits and food stamps.
"They have lower incomes so they pay less in taxes and, because they have lower incomes, they get more federal aid," said Morgan Scarboro, a policy analyst at the Tax Foundation.
So why do so many of these states that benefit from the federal government produce conservative politicians who complain that the government is too big?
"There is this perception that so much money is being spent on things that don't benefit them," Williams said. "They ignore the things that do benefit them."
Williams cited foreign aid as a favorite target, even though it makes up only 1 percent of the federal budget, if you count military assistance.
"People view the world as cut my taxes and cut his spending," Williams said. "His spending is wasteful and my taxes are hurting me badly."
Most states are winners when it comes to getting more money from the federal government than they pay in taxes. On average, Americans get $1.22 for every dollar they send to Washington, according to the New York study.
That's why the federal government has a budget deficit.
The federal spending comes from social programs such as Social Security, Medicare and Medicaid, as well as grants to state and local governments and spending on infrastructure.
States such as South Carolina, North Carolina and Virginia benefit from having large military bases.
The biggest losers when it comes to taxes and spending are New Jersey, Wyoming and Connecticut. New Jersey gets back just 77 cents for every dollar it pays, while Wyoming gets back 81 cents and Connecticut gets 83 cents.
New York gets 91 cents for every dollar it sends to Washington, according to the comptroller's report.
All these states have incomes above the national average.
"It's a good example of a progressive tax code," Scarboro said. "That is how it is designed to work."
___
Follow Stephen Ohlemacher on Twitter at: http://twitter.com/stephenatap