New Hampshire Shoulders the Country’s Tax Burden
WASHINGTON, March 16– Granite Staters may think about moving west after reading a study released Thursday by the Tax Foundation that shows New Hampshire ranks third from the bottom in federal spending received per dollar of federal taxes paid.
With only 67 cents coming back to the state for every tax dollar sent to the federal government in 2004, New Hampshire is ranked as the third-most generous state, only slightly behind New Jersey (55 cents on the dollar) and Connecticut (66 cents on the dollar). This means that for each dollar New Hampshire residents and businesses pay, the government spends only 67 cents on projects within and grants to the state.
New Hampshire is deemed a “donor state” by tax foundation president Scott Hodge. In 2004, the state paid $9.65 billion 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 $6.45 billion was received in federal spending.
When the money is not going back into New Hampshire projects, it is instead going to “beneficiary states,” like New Mexico, which received two dollars back in federal funds for each dollar paid to the government in 2004, the latest year for which such figures were available.
And New Hampshire has progressively seen a smaller share of its tax money come back over the past 10 years, according to the Tax Foundation, a non-partisan tax research organization in Washington, D.C., that has released its annual study for the past 20 years. Although it has gained 2 cents in funds since 2003, in 1994 the state was receiving 73 cents back on the dollar.
In the foundation’s study, 18 states are classified as donor states and 32 as beneficiary 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,” said Curtis Dubay, an economist at the Tax Foundation. “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, that is a rather small portion. “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 y.
Rep. Jeb Bradley, R-N.H., said New Hampshire “does not utilize social programs and services to the degree that other states do because of our strong economy and household income levels higher than those of other states.”
“New Hampshire enjoys strong economic growth,” Bradley said, “including one of the lowest unemployment rates in the country and a high per capita income-one of the main reasons why the Granite State was recently ranked the ‘Most Livable State’ for the third year in a row.”
“I will continue to advocate for federal funding for necessary and efficient programs that are reflective of our New Hampshire values of frugality and individual responsibility,” Bradley said.
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