Naturally, the more populous a state, the larger the federal payout. It should come as no surprise that California ranks No. 1 when “most” is calculated that way.
Recently, the online investment website 24/7 Wall Street took a look at the term “most” another way. It examined states that received the most money from the federal government relative to how much they paid in federal income taxes. The website took data from the U.S. Census Bureau’s Consolidated Federal Funds report to determine how much is spent in each state on various programs, grants and public employee salaries.
Then it took data from the Internal Revenue Service to calculate how much each state paid in income taxes to the federal government and subtracted that from what each state received. Lastly, the website divided the remaining figure by the population to get the per-capita federal spending.
Alabama came in No. 7, paying $1,164 per capita in federal income taxes. It receives $11,820 per capita in return — a “profit” of $10,656.
Alabama ranks second nationally for the amount it spends per capita on retirement and disability payments, $3,761. The state also ranks seventh for procurement spending per capita, most of which comes from the defense budget, programs under the Department of Health and Human Services and the Department of Agriculture.
Alabama did not get much from grant spending. This was not explained, but it might be from a lack of trying to get the grants or that the competition was too stiff and the state did not make the grade.
We return to the same old situation about Alabama and its fiscal relationship with the federal government, just looked at another way.