States receive annual federal assistance for things such as infrastructure, education, Medicaid programs, disasters and, of course, the Covid crisis.
But some states receive a far higher return on their federal income-tax contributions than others, according to WalletHub.
To find out exactly which states depend most on the federal government for assistance, WalletHub compared the 50 states in terms of three key metrics – return on taxes paid to the federal government, share of federal jobs and federal funding as a share of state revenue. WalletHub then determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order the states.
The analysis revealed that there is a correlation between a state’s federal dependency and its per-capita GDP, meaning that the least wealthy states tend to receive the most federal support.
With exceptions such as Delaware, Utah, Colorado and a few others, the states with the lowest dependency tend to have a higher tax rate.
Also, blue states, with an average dependency rank of 20.44, are less reliant on the federal government than red states, which have a rank of 30.56 on average.
The study looked at how ranks in terms of how much their residents depend on federal aid, and how much their state governments are dependent on the federal funds.
These are WalletHub's 2022 top 15 states that are most federally dependent:
15. Missouri
The state has high taxes (28th rank out of all states). Its state government's dependency rank on the federal government is ninth among all states and its residents' dependency on the government ranks 32nd. It has a low GDP per capita (36th).
14. Tennessee
The state has low taxes (10th) and its state government dependency on the federal government ranks eighth; its residents’ dependency on the government ranks 26th and it also has a low GDP (35th).
13. Maine
The state's government has high taxes (34th), a high dependency on government (19th) and its residents’ dependency on the government ranks 11th. It has a low GDP per capita (42nd).
12. Wyoming
The state has the fifth-lowest tax rate. Its government has a high dependency on the government (fifth) and its residents’ dependency on the government ranks 25th. It has a high GDP per capita (9th).
11. South Carolina
The state has a low tax rate (14th). It has a high dependency on the government (25th) and its residents’ dependency on the government ranks seventh. It has a low GDP per capita (46th).
10. Alabama
The state has low taxes (15th). The state's government has a high dependency on the government (10th); its residents’ dependency on the government also ranks 10th. It has a low GDP per capita (47th).
9. Indiana
The state has high taxes (35th). The state government's reliance on the government is low (12th) and its residents’ dependency on the government ranks ninth. It also has a relatively low GDP per capita (29th).
8. Louisiana
The state has low taxes (23rd) and its government is the most dependent on the federal government amongg all states. Its residents’ dependency ranks 21st and it has a low GDP per capita (34th).
7. Arizona
The state has low taxes (16) and a high dependency on the government (sixth). Its residents’ dependency on the government ranks 12th. It has a low GDP per capita (38th).
6. New Mexico
The state has low taxes (20th), high dependency on the government (15th) and its residents rely heavily (third) on the government. It has a low GDP per capita (41st).
5. Montana
It has the third-lowest taxes, and its state government has the second-highest dependency on the federal government; its residents’ dependency on the government ranks 13th. It also has low GDP per capita (43rd).
4. West Virginia
The state has low taxes (17th) and a high state government dependency on the government (11th). Its resident alsos rely heavily on the government (second). It has a low GDP per capita (48th).
3. Kentucky
The state has high taxes (39th) and a state government with a high dependency on the federal government (7th). Its residents’ reliance on the government ranks sixth. It has a low GDP per capita (45th).
2. Mississippi
It has high taxes (36th) and a state government with a high reliance on government (fourth). Its residents’ dependency on the federal government ranks fourth and it also has the lowest GDP per capita of all states.
1. Alaska
The state has the lowest tax rates. The state government also relies heavily on the federal government (third) and its resident’s dependency on the government is the highest of all states. But it has a high GDP per capita (fifth) due to its energy sector.
The full report can be viewed here.
