Associate Professor of Sociology at the City University of New York, Queens College

Research Note

Federal Tax Payments by State

A comparison of federal tax revenues drawn from each state.
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This analysis examines the distribution of federal tax payments by state. It uses a compiled set of state-level public finance and socioeconomic variables detailed here.1 Our data is from 2018.

Total Federal Tax Payments

The map below depicts state contributions to total tax revenues, the total amount of money transmitted from people and enterprises in that state to the federal government. See Table A-1 at the end of this post for precise estimates.

Map depicting total federal taxes paid by state, 2018
Figure 1: Total Federal Taxes Paid, by State, 2018

States’ total contribution to the U.S. federal government budget is almost perfectly predicted by their population and general income levels. In and of itself, this observation seems unremarkable. However, the map does speak to the federal government’s financial dependency on large state contributions. Half of all federal receipts are generated in eight states – California, Texas, New York, Florida, Illinois, Pennsylvania, New Jersey, and Massachusetts. By contrast, the 25 states who remit smaller aggregate contributions to the federal government generate about 15% of revenues. Although the architecture of the federal government privileges small states in political affairs, federal government financing is highly dependent on the resources provided to it by large states. Large states are important to the Union because they contain most of the people and generate most of the wealth. A policy environment that does damage to large states is one that damages the economic engine of the federal union.

Per Capita Payments

Per capita tax revenues depicts the average tax bill paid by people in a given state. Figure 2 (below) depicts the distribution of per capita federal taxes by state. This metric is calculated by dividing total tax revenues by the state’s population. More precise estimates presented below on Table A-1.

Figure 2: Per Capita Federal Taxes Paid, by State, 2018

The figure shows that per capita tax payments are higher in the Northeast and West Coast than other states. What explains these per capita tax differentials? The models depicted below in Table 1 suggest that these differences are largely a product of differences in state incomes.

Table 1: OLS Model Predicting Per Capita Federal Tax Expenditures (logged), 2018

The model predicts that a 10% increase in per capita GDP will result in roughly 8.4% higher per capita tax payments (a very close association, which drives this model’s impressive R-squared). A similar rise in median incomes are predicted to result in a roughly 3% rise in per capita taxes.

What explains these findings? Likely high income taxes high-income people and businesses, and to a lesser extent by higher payroll taxes yields from areas with higher prevailing incomes.

Figure 3: Correlates of High Incomes

Overall, this look at the data suggests that federal tax differentials are mainly driven by the distribution of high-income households and businesses. Federal tax receipts are higher in places that house rich people. They are also higher when the typical person enjoys a higher incomes. Both average and median incomes are related to less poverty as well, but higher living costs.

Appendix

Table A-1: State Rankings in Total Federal Taxes, Per Capita Taxes, Per Capita GDP, and Median Income, 2018

StateTotal TaxesStatePer Capita TaxesStatePer Capita GDPStateMedian Income
California441,425Connecticut14,502New York87,248Maryland95,572
Texas263,614Massachusetts13,833Massachusetts82,650Hawaii88,006
New York253,840New Jersey13,095Connecticut78,312New Jersey87,726
Florida205,276New York12,989Delaware76,705Massachusetts87,707
Illinois134,772New Hampshire11,648Washington76,360Connecticut87,291
Pennsylvania123,091Washington11,409California75,210New Hampshire86,900
New Jersey116,659California11,159North Dakota74,054Utah84,523
Massachusetts95,479Delaware11,059Alaska73,624Washington82,454
Ohio94,617Maryland11,031New Jersey68,808Minnesota81,426
Virginia89,345Wyoming10,880Wyoming68,722Virginia81,313
Washington85,974Minnesota10,664Maryland68,118Alaska78,394
Georgia85,859Illinois10,578Illinois67,737California78,105
Michigan85,438Virginia10,489Minnesota66,284Oregon74,413
North Carolina81,721South Dakota10,476Hawaii65,541Illinois74,399
Maryland66,655Colorado10,208Colorado65,394Vermont74,305
Minnesota59,840Rhode Island9,780Nebraska64,639Delaware74,194
Colorado58,140North Dakota9,759Virginia62,636Kansas73,151
Tennessee53,877Florida9,638Texas62,562Nebraska73,071
Arizona53,402Pennsylvania9,611New Hampshire62,357Colorado72,499
Indiana53,108Alaska9,319Pennsylvania60,777New York71,855
Wisconsin52,764Nebraska9,257South Dakota60,346Nevada70,906
Connecticut51,812Nevada9,244Iowa60,247Arizona70,674
Missouri49,178Texas9,185Kansas58,979Pennsylvania70,582
South Carolina35,891Wisconsin9,076Wisconsin58,063Rhode Island70,151
Oregon35,842Hawaii8,719Ohio57,747North Dakota70,031
Louisiana33,173Vermont8,610Oregon57,742Texas67,444
Alabama33,107Oregon8,553Utah57,455Wisconsin67,355
Kentucky29,988Michigan8,547Georgia57,229Indiana66,693
Nevada28,050Kansas8,466Rhode Island56,676Maine66,546
Oklahoma27,586Iowa8,304Nevada55,754Iowa66,054
Iowa26,210Georgia8,162Indiana55,055Idaho65,988
Kansas24,648Ohio8,094North Carolina54,649Wyoming65,134
Utah24,128Missouri8,027Louisiana54,343Ohio64,663
Arkansas20,648Tennessee7,958Tennessee53,580South Dakota64,255
Nebraska17,859Indiana7,936Vermont52,660Michigan64,119
Mississippi16,850North Carolina7,870Michigan52,202South Carolina62,028
New Hampshire15,800Utah7,633Missouri51,898North Carolina61,159
New Mexico12,952Maine7,472Oklahoma50,366Missouri60,597
Hawaii12,385Arizona7,446Florida49,311Montana60,195
Idaho11,684Montana7,399Arizona48,903Oklahoma59,397
West Virginia10,712Louisiana7,119Maine48,234Florida58,368
Delaware10,696South Carolina7,059New Mexico47,761Georgia56,628
Rhode Island10,340Oklahoma6,996Montana47,719Tennessee56,627
Maine10,000Arkansas6,851Kentucky46,515Alabama56,200
South Dakota9,242Alabama6,773South Carolina46,279Kentucky55,662
Montana7,860Kentucky6,711Alabama45,220Arkansas54,539
North Dakota7,418Idaho6,660Idaho45,086West Virginia53,706
Alaska6,872New Mexico6,181West Virginia42,990New Mexico53,113
Wyoming6,286West Virginia5,932Arkansas42,392Louisiana51,707
Vermont5,393Mississippi5,642Mississippi38,030Mississippi44,787

  1. Cohen, Joseph N. 2020. “State Balance of Payment Data, 2018.” Retrieved (<osf.io/eh2d9>).

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