Red and blue: Tax takers and tax makers

Kyle Sammin devotes a fascinating Federalist column to the debate over whether “red” states or “blue” states contribute more and take more from the federal government.

How much the federal government takes in taxes is simple question. How much they pay out gets more complicated.

One way of looking at it is to see what percentage of states’ budgets are paid for by direct transfers of federal funds. That was the analysis done in a Pew Trusts report in July 2017, based on federal government data from fiscal year 2015. …

… The results are somewhat at odds with the claims on the Left that the red states are takers while the blue states are makers. Of the ten states with the lowest percentage of funds coming from Washington, three are red, six are blue, and one is purple. The state with by far the lowest level of federal subsidization was the deeply red state of North Dakota. The highest ten included eight red states, but also two blue states: Oregon and New Mexico. …

… On average, the three groups were not that far apart. Against a national average of 32.62 percent federal subsidy, the blue states received 30.80 percent. Purple states were almost exactly at the national level with 32.92 percent coming from Washington. Red state budgets averaged 35.75 percent federal money. As with the taxes, there is a slight tilt to one side, but nowhere near what you would think based on complaints from the Left.

A problem with this metric is that although federal funds make up a larger percentage of red states’ state budgets, the budgets in those states are generally lower overall than those of the free-spending blue states. If, instead of comparing federal funds to state budgets, we look at how much the federal government spends in intergovernmental grants per resident of a state, the results are turned on their heads.

Against a national average of $1,935 in intergovernmental spending per American, red states receive just $1,879. Blue states get considerably more, at $2,124 per resident. Purple states see the least of their money returned to them per capita, at just $1,770. Measured in this way, the blue states are getting quite a bit more than the red or purple.