America’s Greece(s)

In summing up the situation in Europe, the APM’s Marketplace show today made an interesting point: while the US and the EU both have a Monetary union, only the US has a Fiscal union – in short, the Federal Govt in the US raises taxes from all over the country, and then distributes them in ways that involves a transfer of income from one state to another.

It got me wondering – which states are America’s Greece(s)? While the situation with Puerto Rico is in the news right now because of their unsustainable debt burden (making them more like Greece to be fair), I got to thinking – which states are “givers” and which states are “takers” on an income and expense perspective.

To answer this question there is a great Wikipedia page which lays out the data from the IRS against the data of US Federal Government spending by State.

The problem was, the data dealt in raw numbers of millions taxed and spent, and while it also included ratios based on Gross State Product (GSP), but I was really interested in the per-capita net tax or subsidy state by state. So, combining the data from a few of these sources, I put together the per-capita numbers.

The results were really interesting, including:

  • The average person in North Dakota has the most amount spent per person ($77,040) by the Federal Govt. I don’t know whether this is farm subsidies (I’m told their crop insurance pays out even if they don’t bother planting), or if it is the result of a lot of money spent manning missile silos, but either way it is pretty breathtaking. Their fairly small revenue per person means each human in North Dakota costs the rest of America $66,782 per year (on average).
  • The average person in Utah has the least amount spent per person ($4,573) by the Federal Govt. That’s pretty impressive, and they’re followed not so far behind by Kansas and Nevada – so when those voters in these red states vote Republican and claim they want small government, they’re not being hypocritical.
  • Washington DC has the highest per-capita paid per person ($40,117), and the second highest spending per person ($40,296). This makes sense since there isn’t a “state” in the middle taxing or spending, but it is interesting the folks who write the rules pay themselves well out (often out of the Federal budget) and manage to get back just a little more than they spend.
  • The Carolina’s are very different fiscally – while they’re southern neighbors, North Carolina is a net contributor ($1,260 per person per year) whereas South Carolina is the second biggest taker from everyone else in America with a net receipt of $10,518 per person per year.
  • When it comes to Federal tax receipts, the poorest state in the Union is Mississippi ($3,678 per person), followed by West Virginia ($3,721 per person), with New Mexico ($4,199) the only state in the top 5 not from “the South” (#4 is South Carolina at $4,603 and #5 is Alabama at $4,906).
  • Former manufacturing-heavy states with “Rust Belt” populations make up a third of the top 9 biggest deficit states (#4 Indiana, #7 Wisconsin and #8 Pennsylvania).

While the climate isn’t nearly as nice, there’s a serious shortage of islands and no sea, without these heavy fiscal transfers, North Dakota would be America’s Greece.

fargo

 

Got other observations from the data? Would love to read them in the comments!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s