Massachusetts and Connecticut Shoulder US Tax Burden
WASHINGTON, March 16-Massachusetts and Connecticut are shouldering the tax burden of other states, according to a study released Thursday by the Tax Foundation.
Massachusetts has the seventh-highest tax burden in the country, with only 77 cents of federal spending going back to the state for every dollar Massachusetts residents and businesses paid in taxes in 2004.
Connecticut has the second-highest tax burden, with 66 cents of federal spending going back to the state for every dollar sent to Washington. Only New Jersey residents are seeing less of their money, with 55 cents for every dollar sent to Washington coming back to the state.
“By and large, states with the highest per capita federal tax burden are among the biggest donor states,” said Scott Hodge, the Tax Foundation’s president, in a teleconference call. “Connecticut has a per capita tax burden of over $10,000, making it the number two donor state.”
In 2004, the latest year for which the figures are available, Massachusetts paid $57 billion and received $44 billion in federal funding. In Connecticut, more than $36 billion was paid in federal taxes-which includes income and corporate taxes, Social Security and unemployment taxes, excise, estate and gift taxes, along with customs duties-but only $24 billion was received back in federal spending.
The foundation considers both states to be “donor states,” which means that some of the money residents and businesses in these states pay in federal taxes is going to other, so-called “beneficiary states,” like New Mexico, which receives two dollars back in federal funds for each dollar paid to the government.
According to Curtis Dubay, an economist at the Tax Foundation, a non-partisan tax research organization in Washington, D.C., in states with a high concentration of high-income individuals, there is going to be a greater tax burden.
“No matter how the spending breaks down, those states will never receive enough money to make up for the taxes they’re actually sending to Washington, especially Connecticut and Massachusetts; those are high-income areas,” Dubay said. “They’re never going to be able to make up the difference with expenditures.”
In the foundation’s study, 18 states are classified as donor states and 32 as recipient states.
This also can be considered a red state, blue state issue. In 13 of the 19 states that Sen. John Kerry won in 2004, more money was sent to Washington than was received back in federal spending. But 25 of the 31 states that President Bush won were recipient states, with some receiving almost double the money that was sent to the federal government.
“Spending patterns don’t change very much over time,” Dubay said. “A huge portion of spending is already predetermined, it’s entitlement driven, it’s Social Security, it’s Medicare and other mandated programs.”
Discretionary spending is the only part of federal funding that can be changed, and according to Dubay, is a rather small portion of the total. “So unless you see major changes in federal expenditure, the way the federal expenditures are handled, it doesn’t seem like those ratios will change,” he said.
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