Monday, August 15, 2011

NM Leads in Federal Dollars

The United States is one country, so it's easy to spend more money in some states than the given state pays in taxes to the federal government.
New Mexico leads in this status, reports The Economist in the July 30 issue. Take federal taxes paid minus federal spending as a percentage of state GDP for the years 1990 to 2009. New Mexico has received more money from the feds than sent to the feds to the tune of 260% of GDP.
The reason is that our modest population of two million, ranking about 37th nationally, and ample space have made New Mexico an ideal place for critical activities paid for with federal money—national laboratories, testing at White Sands and two Air Force bases requiring large, preferably empty spaces for practice.
Virginia and Maryland (including Washington, D.C.) roughly tie for second in this financial sweepstakes with federal financing coming in around 150% of GDP. One difference, though is that those two states, while having much national defense work, do The Government, everything else but national defense. Also, the two states have more people, 6.3 million in Maryland and eight million in Virginia. So there's much more money sloshing around.
The Economist's point is that since Europe consists of independent states, the European Union can't move the money around with the ease of the U.S.

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