One of the sidelight issues in the current campaign for governor has become Paul LePage’s belief, stated several times now, that the state should only receive back from the federal government an amount equal to what it contributes.
That may be a noble thought, but it seems impractical and would likely deprive the state and its residents of millions of dollars.
“I believe that the state of Maine is entitled only to the federal dollars that are the moneys that come out of Maine and go into federal coffers,” LePage told an interviewer in August.
According to The Tax Foundation, a nonprofit research group based in Washington, D.C., some states benefit way more from federal taxing and spending policies than others.
“Some ‘beneficiary’ states receive a positive return from Uncle Sam, making other states ‘donors’ who pick up the tab.”
And, as you might have guessed, Maine is a beneficiary state, not a donor.
In fact, according to The Tax Foundation, we received about $1.41 back from Washington for every dollar we sent.
That was in 2005, the last time The Tax Foundation ran the numbers. With the federal stimulus money that has poured into Maine over the past year and, with incomes stagnant or falling, that number is now probably much higher.
But we are still far down the list (number 13) of beneficiary states.
New Mexico and Mississippi got about $2 back for every one they sent to Washington in 2005.
The ruggedly independent and government-despising folks of Alaska were next on the list, getting back $1.84 for every dollar they sent to Washington.
Louisiana, West Virginia, North Dakota, Alabama, South Dakota, Kentucky, Virginia, Montana and Hawaii all received more back than Maine, per dollar sent.
So, which states end up picking up the tab?
New Jersey, Nevada and Connecticut only get about 60 cents on the dollar sent to Washington.
New Hampshire, Minnesota, Illinois, Delaware, California and New York all get between 71 and 79 cents returned.
In total, 17 states pay more than they get back, while 32 receive more. Tiny Rhode Island comes out exactly even — a dollar sent for a dollar returned.
But why?
There are a variety of factors, according to the Foundation.
First, some states have wealthier residents and they simply pay more tax on that wealth.
For instance, in 2009, Maryland had an average family income of about $69,000. In Maine, meanwhile, it was about $46,000. In Mississippi, about $36,600.
Other factors that determine how much a state gets: having powerful members of Congress, the number of federal employees in a state and, a big one, the number of poor and elderly people.
So Maine, with relatively low household income, pays less. And Maine, with its extremely high number of residents over 65 (about 15 percent, nearly twice as high as Utah, the youngest state) receives more.
It’s difficult to see where Maine would logically turn off the tap of federal money. Turn down Medicaid or Medicare payments for hospitals? Send back educational dollars intended for schools? Refuse unemployment compensation?
Again, there may be better ways to tax and spend. But a total transformation of the federal/state relationship is probably beyond the scope of even the most determined governor.
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