Illinois again near bottom in bang for its tax buck

WASHINGTON -- Illinoisans can be forgiven if they feel their federal tax burden seems a bit heavy. Turns out they're carrying New Mexico, Mississippi and West Virginia, among others.

An Associated Press analysis of 2005 federal data again confirms Illinois' status as a so-called "donor state" -- one in which taxpayers send more money to Washington, D.C., than they get back in federal spending.

Illinois has historically ranked near the bottom in such studies, a finding that has long frustrated state politicians, especially given the power positions -- such as Dennis Hastert's tenure as House Speaker -- Illinois residents have held on Capitol Hill.

On average, Illinoisans paid $9,336 in federal taxes and got $6,328 back. That boils down to 68 cents back for every dollar in federal taxes, which places Illinois fifth worst among the 50 states and District of Columbia.

Delaware fared worst of all, receiving just 42 cents for every tax dollar sent to Washington.

On the flip side, New Mexico received $3.10 in federal spending for every tax dollar the state sent to Washington -- more than any other state. In all, 30 states and the District of Columbia received more money from the federal government than they paid in federal taxes.

No wonder there's a federal budget deficit.

"I don't get all worked up that Minnesota only gets 46 cents back. I get worked up about the lack of accountability," said Lynn Reed, executive director of the Minnesota Taxpayers Association, which advocates for a more transparent tax system.

"You could write into law that every state should get at least 80 cents back, but that's dumb," he said. "It's inefficient."

The Census Bureau released its annual report on 2005 spending by the federal government Tuesday. It documents the geographic distribution of $2.3 trillion in government spending, including salaries, grants, military pay, government contracts and Social Security payments.

It excludes interest on the national debt, overseas spending and the classified budgets of intelligence agencies.

The AP compared the census data to previously released IRS figures for 2005 federal tax collections. The IRS data includes individual, corporate and excise taxes.

The analysis shows that wealthy states pay more than poor ones, blue states subsidize red states, and states with powerful politicians on key House and Senate committees fare well in federal spending.

High-income states like New Jersey, Connecticut and Massachusetts paid more in taxes than they received in federal spending, while low-income states like Mississippi, West Virginia and Alabama got a much higher return for their tax dollars.

The exceptions were Alaska, Hawaii, Virginia and Maryland -- high-income states that also received high levels of government spending.

Scott Hodge, president of the Tax Foundation, a Washington research group, said the numbers represent a massive redistribution of the nation's wealth.

"I don't think the tax code should be used to redistribute wealth around the country," Hodge said. "It should simply be a tool to pay for government programs."

Why not redistribute wealth? asked James Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities, a Washington think tank.

"I think it is appropriate for people doing well to pay a higher share of their income (in taxes) than those at the bottom," Horney said.

Among the other findings:

• Nearly half of all federal spending went for Social Security, Medicare and Medicaid, a percentage that is likely to increase as Baby Boomers near retirement age.

• Taxpayers in the District of Columbia paid the most federal taxes per person ($31,250), and received the most federal spending per person ($65,044). However, federal spending for Washington is inflated because many federal employees who work in the city live in Virginia or Maryland. The census counts federal salaries where they are paid, not where those receiving them live.

• Among the states, Delaware paid the most federal taxes per person, at $15,714. Alaska received the most federal spending per person, at $13,916.

• West Virginia paid the least in taxes, at $3,015 per person. The national average was $7,652 per person.

• Nevada received the least amount of federal spending per person, at $5,840. The national average was $7,706.