States Most & Least Dependent on the Federal Government

Source: John S Kiernan, WalletHub, 2014

The extent to which the average American’s tax burden would vary based on his state of residence represents a significant point of differentiation between state economies. But it’s only once piece of the puzzle.

What if, for example, a particular state can afford not to tax its residents at high rates because it’s receiving disproportionately more funding from the federal government than states with apparently oppressive tax codes? That would change the narrative significantly, revealing federal dependence where bold, efficient stewardship was once thought to preside.

The idea of the American freeloader burst into the public consciousness when #47percent started trending on Twitter. And while the notion is senselessly insulting to millions of hardworking Americans, it is true that some states receive a far higher return on their federal income tax investment than others.

Just how pronounced is this disparity, and to what extent does it alter our perception of state and local tax rates around the country? WalletHub sought to answer those questions by comparing the 50 states and the District of Columbia in terms of three key metrics: 1) Return on Taxes Paid to the Federal Government; 2) Federal Funding as a Percentage of State Revenue; and 3) Number of Federal Employees Per Capita.

More information about the significance of these data points as well as a comprehensive state-by-state rankings breakdown can be found below……

Related:
Red states more federally dependent than blue states
Source: Derek Prall, American City and County, March 24, 2014

This map shows the states’ dependencies on the federal government. Red indicates higher levels of dependence, green, lower levels