Ok, so here’s the breakdown from only about 90 minutes of analysis.
Here are the basic questions that call into doubt the MotherJones article, titled Red States Receive More from Washington, that has spread through every liberal blog, site, and media outlet like wildfire:
1) There are no supporting references for the figures sited. If this were an academic paper being submitted for peer review, it would be rejected for that reason alone.
2) Just using the article’s figures, total received by the states exceeds total paid by the state by more than $230 billion. That in itself is interesting to note in this conversation.
3) The numbers they use for Totals Paid/Received for 2007-2009 are less than the IRS is reporting for only 2009 alone. This calls into great question the veracity of their reporting and makes these remaining questions even more pertinent.
4) It would seem to make more sense to calculate the figure per capita. Mississippi, ranked #1 in the disparity, also ranks #50 (out of 51 including DC) in Taxes Paid Per Capita. West Virginia, #2 on the list, ranks 51st in Paid Per Capita. New Mexico, 48th. In fact, out of the top 13 on the article’s list, only Alaska and DC do not rank in the bottom 40 of Paid Per Capita. (Somehow, DC is ranked #1 in Taxes Paid per Capita, and Alaska ranks #33.) Of the ten states that rank last on the article’s list (supposedly the ‘donor’ states), the top 4 rank 2-5 in PPC. Five of remaining 6 all rank in the top 11 in PPC, with Colorado ranking 16th. This is the most obvious correlation in the numbers.
5) DC ranks #1 in Tax Paid per Capita and Fed Funds Received per Capita. Virginia ranks #2 in Received per Capita. That is very strange. This gives credence to the notion that these figures represent Federal dollars spent within a state’s borders, not dollars given TO the states. Nebraska also ranks high on the list (#9.) (Think Dept. of Defense in Virginia and Nebraska.)
6) How are “taxes paid” calculated? Do they include excise and estate taxes? Knowing this helps to support or negate the article’s implications.
7) How are “funds received” calculated? Based on the outlier numbers for DC and VA, it can be assumed that “funds received” are defined as Federal funds spent within the borders of a state, not necessary ON the state, nor TO the state, and certainly not only on entitlements to citizens of the state. If true, a military base, Federal prison, FBI field office, or holding costs of federal lands, may be considered in these “funds received” numbers. If that is true, that seriously effects the implications of the article as these states are not received “aid”, they are merely hosting federal spending.
8) Contrary to the hopes of conservatives, there is NO clear correlation between median income, urban population, or other statistic when analyzing the NET figures. There IS however, a slight correlation between urban population and taxes paid per capita. Contrary to the hopes of liberals, there is NO correlation between voting pattern and taxes paid per capita or taxes received per capita. The results are all over the map (no pun intended.)
9) The article sites 2007 – 2009. The gulf oil spill was during this time. Does disaster aid count as Fund Received? Should that not be accounted for when discussing the article’s implications?
10) Some argue that tax deductions, such as the mortgage tax deduction, are ‘handouts’ and ‘entitlements’ even though no monies are changing hands. I would ask if this is the case here as well.
11) Removing DC as the outlier, the standard deviation of the Tax Paid is twice that of Funds Received. This means that the variation between the states in taxes paid is much greater than the variation between the states in funds received. Or, in other words, most of the states receive an amount within $1.8b of the average. Most the states pay an amount within $2.9b of the average. This becomes relevant for the next point.
12) The states that pay the higher share of the total tax burden are statistically going to receive less than the same percentage of funds received.
13) The states that pay the highest shares of the total tax burden seem to be either near the top in population rank, or heavily industrialized. In other words, the states with the most taxable activity obviously pay the most taxes. This also means they generate the most tax revenue for themselves. They may not NEED as much Federal money as other states.
14) These are MY OWN slightly supported conclusions:
a. These numbers include farm and blue-collar industry subsidies
b. These numbers include Social Security payments.
c. These number include Federal buildings and facilities costs as well as military spending.
d. The states with the higher populations and higher average (not media) incomes, just like society at large, pay the higher percentage of the tax burden. If funds received per capital are more equal across the states, of course they are going to get screwed. Just like rich people (the top 10%) pay 70% of the tax bill but receive nearly none of the freebies.
e. “Spending” is the key figure in this article that needs to be analyzed. There are many way to fudge “spending” and the implications that this article makes, that the Red States are hypocrites that live off of the Blue states, would be greatly effected by knowing the definition of “spending.”
f. Bottom line, this article’s figures are inconclusive at best, and carefully manipulated at worst to create an impression, with zero supporting evidence. Their numbers do not add up, there is no correlation between their own numbers, and without knowing their data sources and methodology, these conclusions would be laughed out of any academic journal.