ALBANY—New York State has grabbed the shortest stick in terms of return on the tax dollars it sends to the federal government each year.
New York State Comptroller Thomas DiNapoli in a recent report says that New York State received 84 cents in return for every dollar it sent in taxes to the federal government last year (federal fiscal year 2016). In fact, New York State had the largest funding imbalance in total dollars of any state.
“New York sent an estimated $40.9 billion more in tax payments to Washington in 2016 than it received back in federal spending,” DiNapoli said. “While the Empire State fares well in some areas, in total it receives significantly less per tax dollar than the vast majority of states.”
The $40.9-billion (or 16 cents for every dollar) deficit is approximately double the deficit recorded in 2013 of $19.9 billion. The State Comptroller explains that the reason for New York State’s deficit increase was largely due to the growth of federal tax collections in New York during that period.
In 2016, New Jersey suffered the next largest deficit at $27.5 billion. Florida had the largest surplus in total dollars, followed by Virginia. The average return for all states was $1.18 per tax dollar sent to Washington, DC.
In light of his report’s findings, DiNapoli adds that federal lawmakers should consider the rising funding gap as they debate proposed budget and policy changes that could significantly impact New York and other states.
In fiscal year 2016, the federal government spent more than $3.8 trillion and brought in approximately $3.3 trillion, with a budget deficit of $585 billion. New York generated 8.3% of federal tax payments, while the state represented 6.1% of the nation’s population in 2016, the report states.
New York State’s per capita individual income tax payments of $7,361 were 54% higher than the national average of $4,768 and ranked third highest overall. Connecticut placed first in this unenviable category at $9,515.
By far the largest category of federal expenditures is direct payments to or on behalf of individuals, which totaled nearly $2.3 trillion, or 63%, of federal spending allocated to the states in fiscal year 2016. Social Security and Medicare represented more than 70% of those direct payments during that period.
A positive from the report was that with $2,383 in per capita federal Medicare payments, New York received 11.4% more than the national average and ranked 12th among the states.
In total, the federal government provided more than $655 billion in grants to state and local governments in its fiscal year 2016. Medicaid represented 56% of that total. Spending on transportation was the second largest federal funding category, at 8.3% of the total. New York ranked fourth among the states in per capita federal grants at $3,103, or 53% above the national average, largely because of Medicaid and other social services-oriented grants.