America's fiscal union: map/chart of federal fiscal transfers between US states

[greenforest32]

I just came across this new interesting article by The Economist about how much every state receives in federal spending compared to how much federal taxes they pay: http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union

Relevant map embedded below (surplus means they receive less spending compared to the taxes paid and deficit means they receive more spending compared to taxes paid)



Discuss

[opebo]

New York, Minnesota, etc. are Germany, and New Mexico and the South are Greece.

[Snowguy716]

You're welcome, America.

It's not mentioned in the article at all, but Minnesota is #2 in the nation for giving away money to other states.  The total over the last 20 years was 199% of the state's 2009 GDP.  Only Delaware beat us, at 206% of GDP.  In a distant 3rd was New Jersey at 150% of GDP.

It is one of the greatest ironies that those with both hands dipped in the federal money pot are the same ones who bitch incessantly about taxes and out of control spending.

You really wanna go that route?  MN will gladly keep all of that surplus we dole out to everybody else.  It would be an incredibly enormous economic boom, overnight.

It must be our super low taxes and non-existant environmental regulations and right to work status!  Oh wait.........

It's also interesting to point out that Minnesota's current unemployment rate is 6.7%, well below the national average.  The only state larger than MN with a lower rate is Virginia.  We know why that is, and why that's going to change. 

Unlike other states that either have oil or have lost so much of their working age populations over the decades that there isn't anyone to not work (the plains states)... we have a low unemployment rate because of private sector job creation.  Relatively speaking, we're doing much better than Texas. 

[republicanism]

It's not mentioned in the article at all, but Minnesota is #2 in the nation for giving away money to other states.

Yeah, I was surprised by that. How comes Minnesota is so well-off?

[bullmoose88]

Can't we just chuck mississippi into the abyss already?

[Progressive Realist]

California has lost a lot of revenue due to the tax burden in the state being shifted from commercial, corporate, and nonresidential property and business taxes to personal income, residential property, sales, and excise taxes.

So you have the lower and middle classes shouldering more of the tax burden in recent years in California than the rich.

And yet...we still lost 18% of our  2009 GDP in the last 20 years to other states in the form of surplus tax revenue. Obviously, not like Minnesota or Delaware, but still...

The high-tax areas are where people want to live, generally speaking. You want good schools, good roads, clean streets, a strong middle class, low rates of crime..well, there is no free lunch.

[cavalcade]

It's almost as if, as a general rule, urban areas subsidize rural areas.

However, is Social Security counted here?  Because if I work and pay my payroll taxes in the Northeast, and then move to the Sunbelt and collect Social Security, that's going to skew this analysis.

[Snowguy716]

It's not mentioned in the article at all, but Minnesota is #2 in the nation for giving away money to other states.

Yeah, I was surprised by that. How comes Minnesota is so well-off?

We have a highly diversified economy and a well educated populace.  Minnesota was a very middling state prior to the 1960s.  Several major governmental reforms during the 60s and 70s greatly improved education and infrastructure by making government spending equitable.  This redistributed tax revenues but still allowed local control.. so no matter where you lived in MN, you'd have good police and fire coverage, access to recreation (parks, etc), and good schools.  A lot of rural Minnesota boomed after this after stagnating for decades.  And because incomes and prosperity grew so much, tax rates could remain lower and we didn't have to soak the wealthier communities.

The governors in the past 30 years have also been huge "salesmen" for Minnesota-based products and services.  We've had a lot of lucrative trade deals with foreign companies and governments thanks to the idea of "governor as advocate" started by Rudy Perpich back in the '80s.

We also have little exposure to large banks compared to most places.  Most people here bank with small community banks and credit unions.  While many got caught up in the real estate bubble, meaning we have the 5th highest rate of banks with excessive amounts of bad debt... we also have a ton of banks.... most of which were more conservative in their lending which meant we weathered the financial crisis better.

The only large bank with a big presence in Minnesota is Wells Fargo, which fared much better in the financial crisis than the other big banks (like Bank of America, Chase, etc).

In my town of 30,000 people... Wells Fargo is the only of the large banks.  But I can name off like 12 other banks that only have branches in my town or in the surrounding towns.  

[republicanism]

Very interesting, thanks a lot for your explanations Snowguy.

I knew of course that Minnesota enjoyed more progressive economic policies than most other states, though I didn't know that you are in fact on of the richest states of the US. Must be the Scandinavian genes

From overseas, I'd always associated Minnesota more with the poorer states that were hidden hard by the farm crisis, like Iowa.

[RomneyGekko Situation Hairgel]

PA is break-even.  Wonder what it would be like sans Jack Murtha's district and all the military bases/depots in central PA?

[bullmoose88]

It's not mentioned in the article at all, but Minnesota is #2 in the nation for giving away money to other states.

Yeah, I was surprised by that. How comes Minnesota is so well-off?

Its not an apples to apples comparison.  Its not absoluted dollars being compared.  Its a percentage of each states' 2009 GDP.  Trust me New York and California are the ones who should be getting big thank you card from all the Red States they subsidies.  All these Republican governors bragging about balancing their budgets and making fun of California and New York fail to mention that CA and NY welfare payments to Red Stats are the only thing keeping the South from going into a very deep dark fiscal hole.

Take a look at Sara Palin's Alaska.  You really want to put these people in charge of the national budget?

You think the money from CA and NY, at lower percentages outweigh say the total tax dollars from say Illinois and New Jersey?  Certainly Minnesota...but IL and NJ are decent sized economies with higher percentages...it'd be nice if we just had a data table.

[memphis]

http://www.theonion.com/articles/state-of-minnesota-too-polite-to-ask-for-federal-f,1295/

[Tender Branson]

If Austria would pay a net 10% of its GDP each year to the EU, the FPÖ would probably have 70% of the vote ...

[specific_name]

I'm unsurprised that the porkiest of states are the ones that want "gubberment to get its hands off my medicare." It's always the hypocrites that cry the loudest.

[phk]

I'm surprised Ohio is green.

[J. J.]

I don't see too much political correlation.  Its there difference per capita?

[Progressive Realist]

It is one of the greatest ironies that those with both hands dipped in the federal money pot are the same ones who bitch incessantly about taxes and out of control spending.

A big part of that is a long-held resentment held by the West and South against "Easterners." People from those regions have always complained that Washington is controlled by Wall Street or, more broadly, by East Coast business interests. Yes, they get a lot of benefits from Washington, but many Southern and Western states have historically and/or presently lagged behind the North (Northeast and Midwest) in terms of wealth, education, and quality of life for the average person.

Also, there is the element of racism and nativism driving sentiments against government spending on "welfare queens", or on the poor, etc.  As far as taxes go, rural people in general-and the South and West are very rural regions compared to the East Coast-have always had a "Leave Me Lone" attitude on that.

But perhaps the biggest reason is that the South and West have recently been the boom areas of the country. Entrepreneurs and economic growth are valued above all else in such areas.  So what were once rural, agrarian "leave me lone" sentiments have morphed into suburban/exurban, "free market=good/gubmint=bad" sentiments.

In Minnesota, the most right-wing areas are the exurbs of the Twin Cities...which is where people perceive free-market capitalism to have worked wonders for them, and government to be an enemy, not a friend. The cosmopolitan urban areas are where people see the benefits of government stabling the economy, and the rural areas are pretty traditional "leave me lone" areas (except in places like Minnesota where unions and organized politics-DFL in Minnesota's case-have major strength, or rural areas where whites are a minority, or places like New England where the rural areas have well-educated and high-income residents). That pattern is true in much of the country.

[Snowguy716]

It's not mentioned in the article at all, but Minnesota is #2 in the nation for giving away money to other states.

Yeah, I was surprised by that. How comes Minnesota is so well-off?

Its not an apples to apples comparison.  Its not absoluted dollars being compared.  Its a percentage of each states' 2009 GDP.  Trust me New York and California are the ones who should be getting big thank you card from all the Red States they subsidies.  All these Republican governors bragging about balancing their budgets and making fun of California and New York fail to mention that CA and NY welfare payments to Red Stats are the only thing keeping the South from going into a very deep dark fiscal hole.

Take a look at Sara Palin's Alaska.  You really want to put these people in charge of the national budget?

We still sent $513 billion to other states in that time period, the fifth largest absolute amount.  Pretty amazing when you consider we're like 21st in population.

We paid the 13th highest amount in federal taxes... just a tiny bit behind Georgia!  Georgia has what.. 90% more people than Minnesota?

Over the past 20 years, every man, woman, and child in the state (using the average population between 1990 and now) gave up over $100,000 to other states.

No wonder our federal interstate bridges are falling into rivers.

I believe the richer states should subsidize the poorer states because I believe when we all do better, it pays off.  But when you're sucking money out of some states while they clearly have financial needs that aren't being met... well... people start to resent other states.

[Teddy (IDS Legislator)]

Just for fun I've done Canada's map

[Gustaf]

It's not mentioned in the article at all, but Minnesota is #2 in the nation for giving away money to other states.

Yeah, I was surprised by that. How comes Minnesota is so well-off?

Weber says hi.

I'd prefer to have one that averaged % of GDP per year. Regardless, the EU is not ready for these levels of transfer.

I'd be interested to hear whether Opebo in analogy thinks that NY, MN and so on are the problem states that must be kicked out of the US?

[opebo]

I'd be interested to hear whether Opebo in analogy thinks that NY, MN and so on are the problem states that must be kicked out of the US?

No, fiscal union with large scale redistribution (through progressive taxation and a welfare state) works just as well.

[Gustaf]

I'd be interested to hear whether Opebo in analogy thinks that NY, MN and so on are the problem states that must be kicked out of the US?

No, fiscal union with large scale redistribution (through progressive taxation and a welfare state) works just as well.

But you would want the Northeast to be more like the South, right? Stop their destructive policies and become poorer?

[Senator Sbane]

Raising consumption taxes instead of income taxes (or lowering them) is the only way to counteract this. If it's something that should be changed, that is. Places like the Bay area, Socal, Chicagoland, Minneapolis and the northeast corridor pay a lot of income tax.

[Politico]

What exactly is the point of this map if it does not exclude Social Security, Medicare and defense? For example, not a lot of people work in Florida (i.e., pay into Social Security/Medicare in FL) and retire to New Jersey (i.e., receive Social Security/Medicare in NJ), it is absurd to suggest Montana and Wyoming taxpayers are solely responsible for Malmstrom AFB and Francis E. Warren AFB respectively, etc.

[Wonkish1]

What exactly is the point of this map if it does not exclude Social Security, Medicare and defense? For example, not a lot of people work in Florida and retire to New Jersey, it is absurd to suggest Montana and Wyoming taxpayers are solely responsible for Malmstrom AFB and Francis E. Warren AFB respectively, etc.

The big one in my book is highway money. I mean the populations of some of these states are tiny and the principal beneficiary of many of these expenditures like Highway's don't even live there instead they are passing through. Yet when you divide a highway by a population that is 1/20th(or more) of some of these bigger states you might boost your spending per capita total in that state by a noticeable amount.