One of the core defining aspects of economic interconnection between the government and its citizens is taxing. The tax burden often determines the extent to which citizens are capable of making living and feeling comfortable. Americans in different states feel that burden to different degrees and it heavily depends on the amount of aid they receive from the government.
Taxing is often determined by the amount of funds state gets from the federal government. This number varies greatly and funds themselves come in different shapes and forms. This disproportionality makes it hard for all states to use similar taxing models since each state has different holes in their budgets to fill with mr and mrs Taxpayer’s money.
In 2018, Ramussen Reports conducted a research that shows how many adult citizens believe that financial aid from the government is misused. Interestingly, over 60% of Americans are rock solid sure that federal government is spending too much. Only 9% believe that more people should be receiving help.
At the same time, citizens also rely on both government aid and proper taxation to make ends meet and afford goods and services. This often means that in economically developed states people do not has as much debt and can pay back payday loans and other forms of “short” credit relatively quickly. On the other hand, Easier life often pushes people to make irrational financial decisions. This is a double edged sword. The balance between government aid and taxes is a concerning matter for everyone living in this country.
Recently, WalletHub also conducted a very interesting study in which all 50 states were ranked using three key metrics. They decided to give each metric 100 points. The higher the score, the more state depends on the government and has less incentives to tax its citizens harsher. In order to calculate these metrics, WalletHub focused on IRS data, federal government expenditures targeting a state, the amount of federal jobs, the share of state revenue in the economy, and many other factors.
After taking all of the above into consideration WalletHub ranked each state. The summary of their findings can be found below.
- North Dakota, New Mexico, Alabama, Kentucky, and South Carolina are leaders amongst states in terms of the dependency of state residents on financial aid from the federal government.
- Louisiana, Mississippi, Arizona, Kentucky, and New Mexico are top 5 most dependent states that generally do not overburden residents with heavy taxes.
- Connecticut, Illinois, Nebraska, New York, and Rhode Island have the highest tax rates in America with the lowest dependence on the federal government aid.
Federal government aid should be more focused and also factor in many important metrics and aspects of the economy. Finding the perfect balance between taxation and helping out people in dire need of financial assistance is of critical interest for Americans.