Tuesday, December 25, 2012

Federal tax contribution by state

In an earlier post, I had posted the net contribution to Federal government by state as sourced from Wikipedia (i.e. how much the state contributes by way of taxes less the benefits they receive from the Federal Government):



There were a number of people who asked me whether this view is being somewhat distorted by the size of the state.  So, here's the same statistic computed per capita:


What appears to be true is that states with larger populations, as one might expect, have a larger positive net contribution to the Federal government (the correlation coefficient of a state's net contribution to its population is 24.48%).

I ran a little regression and what it suggests is there isn't enough data here to conclude anything and if anything, normalized for states' sizes, although states that voted for Obama were more likely to have a net positive contribution, this isn't statistically significant.

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