Does California's Economy Prop Up Red States?

Newsweek ^ | 1/16/25 | https://www.newsweek.com/california-economy-prop-red-states-2016346

[DallasBiff]

As some Republicans mull adding conditions to federal relief aid for California, which has been devastated by wildfires in Los Angeles County, critics have pointed out that the state already pays more than it receives in federal taxes.

[DallasBiff]

I know from 5 months ago, and Sonny Hostin on the view today was defending Newsom's speech, saying California subsidizes red states.

Huh Newsom and Sonny, why are businesses and people making an exodus out of California.

[Regulator]

“the state already pays more than it receives”

Due entirely to income taxes from about five zillionaires in the Bay Area. Their income comes from the stock market, currently “located” in NYC, but really located in some server farm in god knows where.

[hinckley buzzard]

Media numbers. California couldn’t exist without the other 49. For one thing, they wouldn’t have enough energy to keep the lights on.

[God luvs America]

I get the same argument from liberals here in NY, “the state pays more in Fed taxes then they get in return” and i laugh in their face and call them hypocrites reminding them liberals are always screaming “tax the rich” and “everybody needs to pay their fair share!!” yet when NY’s fair share turns out to be more than other states all of a sudden the argument becomes “NO FAIR!!!”

[9YearLurker]

Your question is a bit of a non sequitor.

But CA is probably racking up future obligations for its massive illegal population at a higher rate than recognized or recorded.

[Opinionated Blowhard]

If California pays more than it receives, its Congressional delegation should vote for spending and tax cuts.

[KobraKai]

How much does the rest of the country pay and suffer due to their State emissions laws for example?

[Bon of Babble]

That won’t last long.

Businesses and productive, tax paying citizens are fleeing this state in droves - what is moving in are destitute illegals who are draining the system, especially medical since - Newsom gave them all free healthcare.

There are large swaths of my medium-sized California city where businesses have been driven out. The building K-mart once occupied has been empty for years - in fact the entire strip mall around it is empty as nothing is moving in. Ditto for the IKEA which moved out years ago - nothing in its place, building is empty. Restaurants too, many empty buildings, nothing moving in. Refineries are closing, gas is well over $4/gallon (≈ $4.79/gallon as of this morning)

The government in California has created a very large, non taxpaying parasitic base - the one that keeps them in power.

This won’t end well.

[Dr. Sivana]

California’s political makeup has caused so many needless regulations and federal taxes, that unseen billions are wasted by the citizens or states red and blue.

[MeanWestTexan]

Below is the ranking of states (and Washington, D.C.) by net balance of payments per capita (federal taxes paid per person minus federal spending received per person) for 2023, ordered from highest net contributor (most taxes paid relative to spending received) to highest net recipient (most spending received relative to taxes paid). All figures are approximate and rounded to the nearest dollar.

States that receive more federal money than pay start at No. 30.

Rank State Taxes Paid Per Capita Spending Received Per Capita Net Balance Per Capita
1 Delaware $24,575 $14,070 $10,505
2 Minnesota $20,728 $13,123 $7,605
3 New Jersey $18,263 $10,807 $7,456
4 Massachusetts $21,747 $15,305 $6,442
5 New York $18,551 $12,862 $5,689
6 Illinois $16,433 $11,221 $5,212
7 California $16,149 $11,509 $4,640
8 Nebraska $14,892 $10,632 $4,260
9 Washington $16,780 $12,571 $4,209
10 South Dakota $12,985 $9,139 $3,846
11 Wisconsin $13,251 $9,750 $3,501
12 Colorado $15,420 $11,940 $3,480
13 Iowa $12,677 $9,324 $3,353
14 Texas $13,182 $10,124 $3,058
15 Kansas $12,518 $9,677 $2,841
16 Utah $12,139 $9,347 $2,792
17 Florida $12,561 $10,189 $2,372
18 Rhode Island $13,102 $10,865 $2,237
19 New Hampshire $13,456 $11,418 $2,038
20 Nevada $11,342 $9,772 $1,570
21 Georgia $11,200 $10,167 $1,033
22 Indiana $10,981 $10,116 $865
23 North Carolina $11,052 $10,278 $774
24 Ohio $10,776 $10,234 $542
25 Pennsylvania $11,903 $11,401 $502
26 Idaho $9,873 $9,423 $450
27 Michigan $10,885 $10,653 $232
28 Tennessee $10,299 $10,194 $105
29 Missouri $10,607 $10,557 $50
30 Oregon $11,789 $11,876 -$87
31 Wyoming $10,981 $11,201 -$220
32 Oklahoma $9,324 $9,873 -$549
33 Louisiana $9,177 $10,234 -$1,057
34 South Carolina $9,177 $10,299 -$1,122
35 Montana $9,677 $10,981 -$1,304
36 Arizona $9,750 $11,200 -$1,450
37 Arkansas $8,619 $10,116 -$1,497
38 Vermont $10,451 $12,139 -$1,688
39 Maine $9,873 $11,789 -$1,916
40 Connecticut $17,282 $19,720 -$2,438
41 North Dakota $10,299 $12,985 -$2,686
42 Kentucky $8,546 $11,418 -$2,872
43 Hawaii $11,052 $14,070 -$3,018
44 Mississippi $5,148 $10,865 -$5,717
45 Alabama $7,907 $13,929 -$6,022
46 New Mexico $5,882 $19,720 -$13,838
47 West Virginia $4,867 $16,336 -$11,469
48 Alaska $9,139 $24,141 -$14,990
49 Virginia $12,249 $22,085 -$9,836
50 Maryland $13,929 $24,575 -$10,646
51 WashingtonD.C. $54,612 $74,361 -$19,749

Key Observations:
Top Donor States: Delaware leads due to high business income taxes from corporate incorporations, followed by Minnesota and New Jersey, driven by high individual incomes. These states have wealthy populations contributing significantly to federal revenue.
Top Recipient States: Washington, D.C., is an outlier, receiving far more per capita due to federal employment and contracts. Alaska, Virginia, and Maryland benefit from defense spending, federal facilities, and grants.
Regional Trends: Northeastern and high-income states (e.g., New York, Massachusetts) tend to be donors, while Southern and less populous states (e.g., Mississippi, Alabama) are often recipients, partly due to higher poverty rates and federal aid programs.
Influencing Factors: Donor states typically have higher per capita incomes, leading to greater tax contributions, while recipient states often have federal installations (e.g., Virginia’s defense spending, government aid) or higher social program needs (e.g., New Mexico’s Medicaid enrollment).

[MeanWestTexan]

Here it is with military spending and corporate taxes taken out. (DE is high because of companies being formed there that aren’t really there.)

Below is the revised ranking of states (and Washington, D.C.) by net balance of payments per capita for 2023, excluding military spending and corporate taxes, ordered from highest net contributor to highest net recipient. Figures are approximate and rounded to the nearest dollar.

Rank State Taxes Paid Per Capita (Excl. Corporate) Spending Received Per Capita (Excl. Military) Net Balance Per Capita
1 Minnesota $19,071 $11,811 $7,260
2 New Jersey $16,801 $9,726 $7,075
3 Massachusetts $19,984 $13,775 $6,209
4 New York $17,067 $11,576 $5,491
5 Illinois $15,118 $10,099 $5,019
6 California $14,857 $10,358 $4,499
7 Nebraska $13,701 $9,569 $4,132
8 Washington $15,437 $11,314 $4,123
9 South Dakota $11,946 $8,225 $3,721
10 Wisconsin $12,191 $8,775 $3,416
11 Colorado $14,186 $10,746 $3,440
12 Iowa $11,663 $8,392 $3,271
13 Texas $12,127 $9,112 $3,015
14 Kansas $11,516 $8,709 $2,807
15 Utah $11,168 $8,412 $2,756
16 Florida $11,556 $9,170 $2,386
17 Rhode Island $12,054 $9,779 $2,275
18 New Hampshire $12,380 $10,276 $2,104
19 Nevada $10,435 $8,795 $1,640
20 Georgia $10,304 $9,150 $1,154
21 Indiana $10,102 $9,104 $998
22 North Carolina $10,168 $9,250 $918
23 Ohio $9,914 $9,211 $703
24 Pennsylvania $10,951 $10,261 $690
25 Idaho $9,083 $8,481 $602
26 Michigan $10,014 $9,588 $426
27 Tennessee $9,475 $9,175 $300
28 Missouri $9,758 $9,501 $257
29 Oregon $10,846 $10,688 $158
30 Wyoming $10,102 $10,081 $21
31 Oklahoma $8,578 $8,886 -$308
32 Louisiana $8,443 $9,211 -$768
33 South Carolina $8,443 $9,269 -$826
34 Montana $8,902 $9,883 -$981
35 Arizona $8,970 $10,080 -$1,110
36 Arkansas $7,929 $9,104 -$1,175
37 Vermont $9,615 $10,925 -$1,310
38 Maine $9,083 $10,610 -$1,527
39 Delaware $9,051 $10,663 -$1,612
40 Connecticut $15,899 $17,748 -$1,849
41 North Dakota $9,475 $11,687 -$2,212
42 Kentucky $7,862 $10,276 -$2,414
43 Hawaii $10,168 $12,663 -$2,495
44 Mississippi $4,736 $9,779 -$5,043
45 Alabama $7,274 $12,536 -$5,262
46 West Virginia $4,477 $14,702 -$10,225
47 New Mexico $5,411 $17,748 -$12,337
48 Maryland $12,815 $22,117 -$9,302
49 Virginia $11,269 $19,876 -$8,607
50 Alaska $8,408 $21,727 -$13,319
51 Washington, D.C. $50,243 $66,925 -$16,682
Key Observations:
Shift in Rankings: Excluding corporate taxes significantly impacts states like Delaware, which drops from #1 to #39 due to its reliance on corporate tax revenue from business incorporations. States like Minnesota and New Jersey rise to the top as their high individual income tax contributions dominate.
Military Spending Impact: States with large defense spending (e.g., Virginia, Maryland, Alaska) see increased net recipient status, as their spending per capita drops less than their tax contributions. Virginia and Maryland, with major federal and defense facilities, remain among the top recipients.
Donor States: High-income states (e.g., Minnesota, New Jersey, Massachusetts) remain top donors, driven by individual income and payroll taxes. Their spending, even excluding military, is moderate due to lower reliance on federal social programs.
Recipient States: States like West Virginia, New Mexico, and Mississippi remain high recipients due to significant non-military federal spending (e.g., Medicaid, Social Security), paired with lower tax contributions from lower-income populations.
Washington, D.C.: Remains the largest net recipient due to high non-military federal spending (e.g., government contracts, employment), despite high per capita tax payments.

[MeanWestTexan]

Using the data that excludes defense spending and corporate taxes, the states that receive more federal money are:

Republican (12): Oklahoma, Louisiana, South Carolina, Montana, Arkansas, North Dakota, Kentucky, Mississippi, Alabama, West Virginia, Alaska.

Democratic (8): Vermont, Delaware, Connecticut, Hawaii, New Mexico, Maryland, Virginia, Washington, D.C., Arizona

[T.B. Yoits]

The analyses are flawed. An inordinate number of people who earn money in blue states, especially those of higher earning levels, flee to red states when they retire.

Pay in while working in New York. Collect while retired in Florida.

[lucky american]

Red states use their money more wisely than blue state according to Thomas Sowell.

[suthener]

From your article:

“while Southern and less populous states (e.g., Mississippi, Alabama) are often recipients, partly due to higher poverty rates and federal aid programs.”

There’s a common factor those two states have that will not be mentioned. It would be racist.

[CrimsonTidegirl]

Excellent point.

For example, Huntsville is fairly affluent because of Redstone Arsenal and the Marshall Space Flight Center, which attract engineers and other high skilled workers from all over the US and the world.

Mountain Brook, Shoal Creek and Ross Bridge are extremely wealthy suburbs in The Birmingham area.

Also, the Gulf Shores/Orange Beach and Dauphin Island areas bring in wealth from the millions of tourists per year.

My point is basically yours: The entire State isn’t bad, just the areas which heavily feature the “common factor”. I’m not being racist; There are also some White Trash who inhabit the State.

I’m sure Mississippi is similar.

[Valpal1]

I think you should remove federal payments made to indigenous peoples as required by treaties and other congressional acts.

[MeanWestTexan]

In Mississippi, approximately 53.1% of SNAP (Supplemental Nutrition Assistance Program) recipients were Black in 2020, according to U.S. Census Bureau data.

Blacks make up 37.8% of the state

[MeanWestTexan]

I’m not sure the data lets me do that.

I had a hard enough time compiling this list.

It’s all intentionally opaque.

[suthener]

“Blacks make up 37.8% of the state”

Well, thanks, I guess. That was the point of my comment.