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.

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.

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.

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.

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

State	Total Taxes	State	Per Capita Taxes	State	Per Capita GDP	State	Median Income
California	441,425	Connecticut	14,502	New York	87,248	Maryland	95,572
Texas	263,614	Massachusetts	13,833	Massachusetts	82,650	Hawaii	88,006
New York	253,840	New Jersey	13,095	Connecticut	78,312	New Jersey	87,726
Florida	205,276	New York	12,989	Delaware	76,705	Massachusetts	87,707
Illinois	134,772	New Hampshire	11,648	Washington	76,360	Connecticut	87,291
Pennsylvania	123,091	Washington	11,409	California	75,210	New Hampshire	86,900
New Jersey	116,659	California	11,159	North Dakota	74,054	Utah	84,523
Massachusetts	95,479	Delaware	11,059	Alaska	73,624	Washington	82,454
Ohio	94,617	Maryland	11,031	New Jersey	68,808	Minnesota	81,426
Virginia	89,345	Wyoming	10,880	Wyoming	68,722	Virginia	81,313
Washington	85,974	Minnesota	10,664	Maryland	68,118	Alaska	78,394
Georgia	85,859	Illinois	10,578	Illinois	67,737	California	78,105
Michigan	85,438	Virginia	10,489	Minnesota	66,284	Oregon	74,413
North Carolina	81,721	South Dakota	10,476	Hawaii	65,541	Illinois	74,399
Maryland	66,655	Colorado	10,208	Colorado	65,394	Vermont	74,305
Minnesota	59,840	Rhode Island	9,780	Nebraska	64,639	Delaware	74,194
Colorado	58,140	North Dakota	9,759	Virginia	62,636	Kansas	73,151
Tennessee	53,877	Florida	9,638	Texas	62,562	Nebraska	73,071
Arizona	53,402	Pennsylvania	9,611	New Hampshire	62,357	Colorado	72,499
Indiana	53,108	Alaska	9,319	Pennsylvania	60,777	New York	71,855
Wisconsin	52,764	Nebraska	9,257	South Dakota	60,346	Nevada	70,906
Connecticut	51,812	Nevada	9,244	Iowa	60,247	Arizona	70,674
Missouri	49,178	Texas	9,185	Kansas	58,979	Pennsylvania	70,582
South Carolina	35,891	Wisconsin	9,076	Wisconsin	58,063	Rhode Island	70,151
Oregon	35,842	Hawaii	8,719	Ohio	57,747	North Dakota	70,031
Louisiana	33,173	Vermont	8,610	Oregon	57,742	Texas	67,444
Alabama	33,107	Oregon	8,553	Utah	57,455	Wisconsin	67,355
Kentucky	29,988	Michigan	8,547	Georgia	57,229	Indiana	66,693
Nevada	28,050	Kansas	8,466	Rhode Island	56,676	Maine	66,546
Oklahoma	27,586	Iowa	8,304	Nevada	55,754	Iowa	66,054
Iowa	26,210	Georgia	8,162	Indiana	55,055	Idaho	65,988
Kansas	24,648	Ohio	8,094	North Carolina	54,649	Wyoming	65,134
Utah	24,128	Missouri	8,027	Louisiana	54,343	Ohio	64,663
Arkansas	20,648	Tennessee	7,958	Tennessee	53,580	South Dakota	64,255
Nebraska	17,859	Indiana	7,936	Vermont	52,660	Michigan	64,119
Mississippi	16,850	North Carolina	7,870	Michigan	52,202	South Carolina	62,028
New Hampshire	15,800	Utah	7,633	Missouri	51,898	North Carolina	61,159
New Mexico	12,952	Maine	7,472	Oklahoma	50,366	Missouri	60,597
Hawaii	12,385	Arizona	7,446	Florida	49,311	Montana	60,195
Idaho	11,684	Montana	7,399	Arizona	48,903	Oklahoma	59,397
West Virginia	10,712	Louisiana	7,119	Maine	48,234	Florida	58,368
Delaware	10,696	South Carolina	7,059	New Mexico	47,761	Georgia	56,628
Rhode Island	10,340	Oklahoma	6,996	Montana	47,719	Tennessee	56,627
Maine	10,000	Arkansas	6,851	Kentucky	46,515	Alabama	56,200
South Dakota	9,242	Alabama	6,773	South Carolina	46,279	Kentucky	55,662
Montana	7,860	Kentucky	6,711	Alabama	45,220	Arkansas	54,539
North Dakota	7,418	Idaho	6,660	Idaho	45,086	West Virginia	53,706
Alaska	6,872	New Mexico	6,181	West Virginia	42,990	New Mexico	53,113
Wyoming	6,286	West Virginia	5,932	Arkansas	42,392	Louisiana	51,707
Vermont	5,393	Mississippi	5,642	Mississippi	38,030	Mississippi	44,787

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