Who profits from federal spending

The Big Dig notwithstanding, Massachusetts is one of the biggest losers in the tax-and-spend game run by the federal government. According to the Washington, DC-based Tax Foundation, in fiscal year 2002 the state got only 75 cents in federal expenditures in return for every tax dollar Bay State residents sent to the nation’s capital. Since 1990, when the state got $1.08 back for every dollar, Massachusetts has fallen from 25th to 46th in the ratio of federal benefits to federal taxes. We’ve fallen seven places since fiscal year 2000, when we ranked 39th and got 86 cents back for every dollar. (See State of the States, CW, Spring 2002.) Only Colorado, whose federal spending per tax dollar slid from $1.16 to 78 cents, suffered a bigger decline since 1990.

The biggest factor pushing Massachusetts down the list may be the state’s high personal income, which means that a relatively large number of citizens have high federal tax bills and a relatively small number qualify for federal programs based on income eligibility. Based on 2001 income tax returns, the IRS estimated that only two states have higher average personal incomes: Connecticut and New Jersey, which fare even worse than Massachusetts in getting their federal tax dollars back. (Colorado ranks 8th in average income.) Mississippi, Montana, and West Virginia had the lowest average incomes, and they’re all in the top 10 in federal spending per tax dollar. The only high-income states to enjoy a “profit” in federal spending were Maryland and Virginia.

Of course, if one looks only at the money coming in to the state, and not the tax dollars going out, Massachusetts does much better. According to the Tax Foundation, the Bay State received $6,933 in federal expenditures per capita in fiscal year 2002, significantly higher than the $6,326 spent per capita nationwide. How do we come out ahead? Looking at fiscal year 2001 spending per-capita, the Northeast-Midwest Institute (www.nemw.org) noted that Massachusetts got far more than the national norm for transit improvement, refugee aid, and energy assistance for low-income families. Among the 10 largest federal formula grant programs, Massachusetts got more than the norm in just three areas: temporary assistance for needy families, Medicaid grants, and special education grants. But it got far less for school lunch and supplemental nutrition programs, as well as Head Start and foster care.

State return on federal taxes

Rank

State

Spending Per Tax Dollar, 1990

Rank

State

Spending Per Tax Dollar, 2002

1.

New Mexico

$2.05

1.

New Mexico

$2.37

2.

Mississippi

$1.66

2.

North Dakota

$2.07

3.

North Dakota

$1.52

3.

Alaska

$1.91

4.

Montana

$1.44

4.

Mississippi

$1.89

4.
Virginia

$1.44

5.

West Virginia

$1.82

6.

Alabama

$1.43

6.

Montana

$1.67

7.

West Virginia

$1.39

7.

Alabama

$1.64

8.

Missouri

$1.36

8.

South Dakota

$1.61

9.

South Dakota

$1.35

9.

Hawaii

$1.57

10.

Utah

$1.34

10.

Arkansas

$1.55

11.

South Carolina

$1.32

11.

Oklahoma

$1.52

12.

Arkansas

$1.31

12.

Kentucky

$1.50

13.

Louisiana

$1.30

12.

Virginia

$1.50

14.

Idaho

$1.28

14.

Louisiana

$1.48

15.

Kentucky

$1.27

15.

Maine

$1.34

16.

Arizona

$1.25

15.

Missouri

$1.34

17.

Oklahoma

$1.24

15.

South Carolina

$1.34

18.

Maryland

$1.23

18.

Idaho

$1.31

19.

Maine

$1.22

19.

Tennessee

$1.26

20.

Alaska

$1.20

20.

Iowa

$1.23

21.

Colorado

$1.16

21.

Maryland

$1.22

22.

Tennessee

$1.14

22.

Arizona

$1.21

23.

Hawaii

$1.13

23.

Nebraska

$1.19

24.

Nebraska

$1.12

24.

Utah

$1.14

25.

Iowa

$1.08

25.

Kansas

$1.13

25.

Massachusetts

$1.08

25.

Vermont

$1.13

27.

Wyoming

$1.07

27.

Pennsylvania

$1.09

28.

Kansas

$1.06

28.

Rhode Island

$1.08

28.

Rhode Island

$1.06

29.

North Carolina

$1.07

30.

Ohio

$0.99

30.

Wyoming

$1.06

31.

Texas

$0.97

31.

Ohio

$1.03

32.

Florida

$0.96

32.

Florida

$1.01

32.

Pennsylvania

$0.96

32.

Georgia

$1.01

32.

Washington

$0.96

34.

Indiana

$1.00

35.

Oregon

$0.95

35.

Oregon

$0.98

36.

Georgia

$0.94

36.

Texas

$0.92

37.

North Carolina

$0.93

37.

Michigan

$0.88

38.

California

$0.89

37.

Wisconsin

$0.88

39.

Indiana

$0.88

39.

Washington

$0.87

40.

Vermont

$0.87

40.

Delaware

$0.85

41.

Minnesota

$0.86

40.

New York

$0.85

41.

Wisconsin

$0.86

42.

Colorado

$0.78

43.

New York

$0.83

43.

Illinois

$0.77

44.

Michigan

$0.82

43.

Minnesota

$0.77

45.

Connecticut

$0.78

45.

California

$0.76

46.

Nevada

$0.77

46. Massachusetts

$0.75

47.

Delaware

$0.75

47.

Nevada

$0.74

47.

Illinois

$0.75

48.

New Hampshire

$0.66

49.

New Hampshire

$0.74

49.

Connecticut

$0.65

50.

New Jersey

$0.68

Meet the Author

50.

New Jersey

$0.62

Source: The Tax Foundation (www.taxfoundation.org), based on information from the US Census Bureau.