The States that Pay the Most in Taxes and Get the Least Benefits

By Andrew Van Dam, Linda Chong / The Washington Post

16:49 JST, July 8, 2023

This week, the Department of Data’s First Anniversary Extravaganza continues with – you guessed it – new data! And this data comes straight from our all-time favorite source material: Submissions from you, our brilliant, hilarious and sometimes slightly unhinged readers.

At last count, we had received legitimate column ideas from nearly 2,000 of you over the past year. Hundreds more of you replied to callouts or otherwise followed up on our stories. And tens of thousands of you tweeted, or left comments, or tracked us down on email, via telephone or at the Costco bakery, near the apple pies, to share particularly pressing quantitative queries.

Of all those submissions, 80 have so far been featured, earning their authors a lovely matched set of Department of Data buttons and ID cards. Hundreds more probably should have been featured and will be in the future – we’re routinely astonished by your collective genius.

But maybe we shouldn’t be so astonished. When we parse the data, more than 10 percent of you who supplied a form of address preferred Dr., which is about seven times the rate of doctorates in the adult population. And we know that’s an undercount, because a surprising number of “Ms.” and “None” types turn out to be PhDs operating in stealth mode when we contact them for follow-up.

The District of Columbia, home to this newspaper, turns out to be the pulsating nerd heart of America by our hopelessly biased metric. More than 1 in 5 reader submissions came from the greater D.C. metro area, with Alexandria, Arlington and Silver Spring following the District itself as top reader locations.

The Seattle area ranks second among metros, presumably reflecting the region’s long engineering heritage – and even longer overcast evenings when folks have nothing better to do than fire off questions to that weird guy from the newspaper.

But the Department reaches far beyond elite coastal megalopoli. We received submissions from every state in the nation (huge thanks to the solitary readers who weighed in from each of the Dakotas), most territories and many countries. We even heard from a half-dozen honest-to-goodness nomads – most often Americans living in recreational vehicles.

Your submissions are so creative and varied that they defy easy summary. The longest unspooled a fascinating dissertation-scale rumination on where best to locate maglev trains in the United States. The shortest simply inquired: “Divorced 65+ move to?” We should absolutely answer both of them at some point!

But when we sliced and diced your text as we would any other data set, our analyses revealed the top question you are burning to have answered: To which states does the federal government giveth, and from which does it taketh away? That is: Which states contribute the most to the federal budget in taxes, and which get the most back in terms of benefits?

Or, as Joseph McClane from Rockville, Md., put it: “Which states are not pulling their weight?”

On behalf of everyone wondering about this, we called the fine folks at the Rockefeller Institute of Government, a nonpartisan Albany think tank affiliated with the State University of New York. Their efforts to answer this wildly popular question can be traced to the late Sen. Daniel Patrick Moynihan (D-N.Y.), a legendary (and sometimes controversial) dataphile. Moynihan’s office first tackled the subject around 1976, not long after President Gerald Ford famously refused to help New York City during the 1975 budget crisis. (Ford eventually lent the city enough to dodge bankruptcy.)

New Yorkers have long maintained an intense interest in state taxes and revenue, presumably because the state almost always ranks near the bottom in terms of the return it gets on its federal taxes. But Laura Schultz, executive director of research at the Rockefeller Institute, said New Yorkers have plenty of company.

“It’s kind of like the fact that everyone thinks they’re middle-class, right? Everyone thinks you’re subsidizing someone else,” Schultz told us. “So I think that when you have data that actually puts that in perspective, it can be interesting, valuable, enlightening.”

Schultz and her colleagues at the institute have assembled a fearsome data machine. It sucks in numbers from sources throughout the federal government – unemployment benefits here, food stamps there and Social Security checks from somewhere else – and splits them state by state. (They only look at states, as Schultz told us, because “D.C. and the territories have fundamentally different relationships with the federal government,” so “direct comparisons aren’t appropriate.”)

The biggest federal programs publish state breakdowns. For others, state-by-state figures must be inferred from outside data sources. But in the end, every railroad retirement pension, military Tricare benefit, estate tax, gas tax and tobacco tax is accounted for.

The vast bulk of the $4 trillion in revenue the federal government received in 2021 came in the form of income taxes and payroll taxes for Medicare and Social Security. Most of the rest comes from corporate income taxes and excise taxes on goods such as gasoline and alcohol.

All told, just 4.5 percent of that income – mostly customs duties and earnings on Federal Reserve deposits – cannot be traced to individual states. (In all cases, we’re using federal fiscal years, which end in September.)

The amount a state sends to the federal government strongly correlates with its income level and factors closely related to income, such as education or the share of the workforce in management and business jobs. Eight of the 10 states that sent the most money per resident to the federal government in 2021 are also in the top 10 states for income.

There’s also a clean partisan divide. Nine of the 10 states that sent the most to the federal government, per person, voted for President Biden in 2020. Nine of the 10 states that sent the least voted for former president Donald Trump. The typical resident of deep-blue Connecticut sent almost three times as much to Washington as the typical resident of deep-red Mississippi.

The expenditures side gets wackier: With the exception of pandemic-related aid, which we’ll exclude from this analysis, federal largesse is not such a simple function of income or population. The sultan’s share of the government’s $4.9 trillion in non-covid spending in 2021 went to Social Security, Medicare and other payments to individuals.

The majority of the $900 billion in federal grants distributed in 2021 went to places that need or accept the most Medicaid funding, with much of the remainder going to places that need to build or maintain infrastructure such as roadways. Federal contracts ($830 billion), many defense-related, went to the places with the most federal contractors, otherwise known as the state of Virginia. Federal wages ($310 billion) went to the states with the largest federal workforces. Again, Virginia made out like a (Beltway) bandit.

So the state – or should we say commonwealth? – that receives the largest per capita share of the federal pie doesn’t need a drum roll. Virginia’s prowess in soaking up federal dollars knows no rivals. The Old Dominion also currently hosts a nation-leading 12 percent of Department of Data reader submissions and 100 percent of its full-time columnists.

Alaska comes in second in the federal benefits sweepstakes. The state boasts more than 1 in every 3 acres of federal land and key military installations. Maryland – which cuts a similar profile to Virginia, albeit on the other side of the Potomac – comes in third.

Contractors notwithstanding, we found that nothing predicts a state’s receipts from the federal government better than its share of working-age adults with disabilities. Lower rates of education, higher rates of poverty, fewer patent filings and more employment in the industry that includes dollar stores also tend to be related to receiving more money from the feds.

Because federal spending is apportioned based on such diverse factors, its relation to politics doesn’t jump off the page. But when you go back to basics, compare spending with revenue and build a simple return-on-investment measure, the red-blue split quickly bubbles up from the depths.

Eight of the 10 states that get the most money back from the federal government per dollar they pay into the system voted for Trump in 2020. Nine of the 10 states that got the least voted for Biden. The typical red state gets back 19 cents more for each dollar sent to Washington than its blue-state friends.

To be sure, the split vanishes in the middle of the rankings, and thus the correlation between Trump vote and higher return on your tax dollars remains pretty low. It’s easily surpassed by more influential variables related to money, education and disabled population.

“It’s not political. It’s high income,” Schultz of the Rockefeller Institute told us. “It should really be green states – where the money is – versus red states, where there isn’t money. It’s not blue-and-red political, it’s green-and-red financial.”

Of course, that raises a thornier question: Why is higher income so closely aligned with support for Democrats? Even in our anniversary column, we aren’t ready to blow the top off that particular can of worms.

Maybe next year.