Taxes: Which States Are Givers and Takers

Which states are givers and which states are takers when it comes to taxes? It seems like a simple concept, to figure out which states pay the most in federal taxes and get the least back, and which states pay the least and get the most back. But is there any political correlation? Will states that vote Democrat prove to be the moochers Republicans claim they are? And will states that vote Republican prove to have pulled themselves up by their own bootstraps?

It turns out there’s a problem with these narratives. Every year, Wallet Hub runs an analysis of which states give the most and which states take the most from the federal government. It’s more complex than it appears at first. Several factors go into this, including the federal aid states receive, the amount of federal insurance supplied and the number of federal employees in the state.

It turns out blue states tend to fare well, and this is a pattern that’s repeated for at least the last decade of this and other studies. The states that give the most to the others include California, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey and Ohio. They make up eight of the 10 least dependent states. Red states Kansas and Nebraska join them.

Delaware contributes the most, receiving back only 31 cents in spending for every dollar the state contributes in taxes.

In an ironic twist, the bottom 10 is rounded out by states that typically vote conservatively and favor smaller government: Alabama, Arizona, Kentucky, Louisiana, Mississippi, Montana and South Dakota all appear.

Bipartisan states like Maine and West Virginia (which votes Republican nationally and Democratic locally) also appear in the bottom 10, with blue New Mexico coming out worst. Take a look at the 2012 presidential election results for an idea of how the U.S. is regionally split between states that vote Democrat and Republican:

Taxes 2012 Election Results

270 to Win

Of the 25 states that are least dependent on the federal government, 19 of them are states that voted Democrat in the 2012 election.

Of the 25 states that are most dependent on the federal government, 18 were states that voted Republican in the 2012 election.

Ranked 1-50, with one being the least dependent on the federal government, the average rank of a blue state according to Wallet Hub is 18.3. The average rank of a red state is 33.2. A few swing states switch from election-to-election, but Wallet Hub’s been running these numbers every year, and every year they indicate blue states are dragging red states ahead.

When the numbers are so stark, it certainly puts into perspective the conservative notion that it’s liberals receiving hand-outs from the federal government. If it weren’t for federal aid, many red states wouldn’t be able to pay for themselves every year.

What this means is conservative claims for smaller government would typically hurt conservative states the most. After all, a bigger government taking in more money in taxes from the states that can afford it helps conservative states more. If it weren’t for New England, the Great Lakes states and the Pacific Coast paying the rest of the country’s way, the South and Southeast would be in dire straits.

Break the numbers down even more and some other interesting facts wring out. The Mid-Atlantic turns out to combine high tax rates and high dependency on the federal government, while the Rocky Mountain states demonstrate just the opposite – low tax rates and low dependency on the government.

The Southeast is a cluster of states putting out very low GDP, yet demanding high contributions to their populations from the government. The Northeast and Midwest do quite well, maintaining high GDP while asking little money from the government in return.

Some results are less surprising:

Centered around Washington, D.C., Virginia and Maryland receive the highest value in federal contracts received compared to taxes paid. That contributes to the Atlantic Coast’s dependency on the federal government mentioned above.

Wisconsin actually receives the lowest rate of federal insurance compared to taxes paid. Who receives the highest rate of federal insurance? Who else? America’s retirement community, Florida.

Maybe this election, politicians from Republican states should spend a little less time harping about hand-outs, and a little more time being thankful their states can still function because of them.


Does this give you a different perspective on the relationship between blue and red states? Will you look differently at politicians who rail against the federal government?




Gabriel Valdez
Gabriel Valdez
Gabriel is a movie critic who's been a campaign manager in Oregon, an investigative reporter in Texas, and a film producer in Massachusetts. His writing was named best North American criticism of 2014 by the Local Media Association. He's assembled a band of writers who focus on social issues in film. They have a home base.