With Tax Day postponed to July 15 and states having received hundreds of billions of dollars in federal aid during the COVID-19 pandemic, the personal-finance website WalletHub has released updated rankings for 2020’s Most & Least Federally Dependent States.
This report illustrates the extent to which states are independent economically. However, the oxymoron in this situation is that states with a higher level of federal dependence are likely better positioned to handle the coronavirus pandemic, given that most relief has come from the federal government.
In order to identify which states most and least depend on federal support, WalletHub compared the 50 states across three key metrics: return on taxes paid to the federal government; federal funding as a share of state revenue; and share of federal jobs.
Tennessee ranked 15th with a total score of 47.73, a state residents’ depenency rate of 22, and state government’s rank of 10.
Most Federally Dependent States
1. New Mexico
4. West Virginia
7. South Carolina
Least Federally Dependent States
49. New Jersey
- With an average dependency rank of 20.97, Red States are altogether more reliant on federal funding than Blue States, which rank 32.85 on average.
- The lower the rank, the more dependent the state is judged to be.
- There is a 54.04 percent correlation between a state’s federal dependency and its per-capita GDP.
- That means the least wealthy states tend to receive the most federal support.
- Illinois is the sixth least federally dependent state, which helps explain the fact that it has the highest tax rates in the nation.
- On the flip side, Alaska is the sixth most federally dependent state and has the lowest tax rates.
To view the full report and each state’s rank, visit wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700.