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Northeast-Midwest Institute Reports on Federal Spending by State

December 15, 2000

Despite small improvements, Northeast and Midwest regions lag behind the South and West in terms of dollars returned to states from taxes sent to Washington, according to a report issued by the Northeast-Midwest Institute.

The Northeast-Midwest region’s return on every tax dollar was $0.88, while the South received an estimated $1.18 in federal spending for every dollar sent to Washington and the West had a return of $1.01, according to Flow of Federal Funds to the States: Fiscal 1999.

Other highlights include:

  • The Northeast-Midwest region made up 40.36 percent of the nation’s population but had 44.61 percent of the nation’s total tax burden, and received 39.20 percent of the 50-state federal spending total in fiscal 1999. In 1999, the South and West, with 59.64 percent of the population, paid 55.39 percent of federal taxes, and received back 60.80 percent of federal spending.
  • The Northeast-Midwest region received $575.9 billion in federal funding, or $5,243 per capita, in fiscal 1999. This per-capita amount equals 97 percent of the 50-state per-capita level of $5,397, one percentage point lower than in fiscal 1998. By comparison, the South and West received $893.1 billion, or $5,502 per capita, in fiscal 1999 – equal to 102 percent of the national level.
  • Of the $1.788 trillion the federal government collected in taxes in fiscal 1999, $797.5 billion came from the Northeast-Midwest, and $990.3 billion from the South and West. But on a per-person basis, the Northeast-Midwest region’s share of $7,261 represented 111 percent of the 50-state per-capita figure of $6,569 and the Northeast’s fiscal 1999 share stood at $7,914 on a per-capita basis, which amounts to 120 percent of the national figure. Both the South and West had lower-than-average per capita amounts of $5,800 and $6,474, respectively.
  • The 10 states with the highest return in fiscal 1999 were New Mexico, Montana, West Virginia, Mississippi, North Dakota, Alaska, Virginia, Hawaii, South Dakota, and Alabama.
  • The top 10 states with the lowest return on their federal tax dollar in fiscal 1999 included: Connecticut, New Jersey, New Hampshire, Nevada, Illinois, Minnesota, Michigan, Delaware, Wisconsin, and New York.

The data used in the Northeast-Midwest Institute’s analysis were drawn primarily from Federal Expenditures by State for Fiscal Year 1999, published by the U.S. Bureau of the Census, and Special Report: 1999 Federal Tax Burdens and Expenditures by State, published by the Tax Foundation.

The Institute’s report analyzes federal spending patterns in the Northeast-Midwest and other regions of the country, and includes data tables for all 50 states. The report is available electronically on the Internet at