Getting to the Bottom of Federal Spending and Taxation in the NEMW Region

Since their founding in the mid-1970s, the Northeast-Midwest Institute and the Northeast-Midwest Congressional and Senate Coalitions have tracked and analyzed federal spending and taxation patterns. In doing so, the Institute and other organizations gained insight into regional equity relative to the flow of federal funds. Past analyses suggest that the majority of states in the Northeast and Midwest contribute more in taxes to the federal government than they receive back in federal spending, clearly underscoring the importance of the Northeast-Midwest region in fiscal support of the nation as a whole. The Northeast-Midwest Institute has not provided information on federal taxation patterns for Northeast-Midwest states since its 2005 Flow of Funds Reports because its source of refined estimates, the Tax Foundation, ceased to produce them. This Note to the Coalitions provides an explanation of what data are still available, their limitations, and what they tell us about the characteristic position of many Northeast-Midwest states as “donor” states—states that receive fewer federal dollars than they pay in federal income and other taxes. We do so by considering a case example: the State of New Jersey.

2011 Note to the Coalitions Getting to the Bottom of Fed Spending Taxation in the NEMW Region