R.I., Mass. receive poor return on federal tax dollars

NORTHAMPTON, Mass. – Thirty states and the District of Columbia received more money from the federal government in fiscal 2005 than their residents paid in U.S. taxes, while 20 states received less than they paid, the National Priorities Project found in an analysis of recent federal data.
Nationally, because of federal borrowing, about $1.01 came back for each dollar paid, the NPP found. Rhode Island ranked 40th and Massachusetts 39th, with each receiving 87 cents in federal aid for each dollar paid, while Connecticut ranked 48th with 67 cents per dollar.
Military outlays totaled about $495.3 billion of the $2.5 trillion the federal government spent in fiscal 2005. But only $390.9 billion or 78.9 percent of that military spending can be traced back to the U.S. states and territories, the NPP said, noting that: “In spite of claims of the jobs created through military spending, much of the money spent on the military never makes it back to the states.”
Nationwide, 91 cents were returned to the states and territories for every tax dollar the military received.
Eighteen states and the District of Columbia received more back in military procurement contracts, salaries, wages and grants than they paid in taxes for military spending, the group found, while 32 states received less back than they paid. Connecticut was among the winners, receiving $1.09 for every dollar in military spending, for a rank of 17th nationally. But Rhode Island and Massachusetts both were among the losers. The Bay State was No. 34, receiving 77 cents per dollar, and the Ocean State was No. 39, receiving 52 cents for every dollar.
Per-capita spending nationally on military contracts was $828. Connecticut (4th nationally) received $2,499 per capita, Massachusetts (12th) received $1,296 and Rhode Island (39th) received $387.
The amount of federal money returned to the states and communities for education ($56.8 billion in fiscal 2005), food and nutrition ($50.6 billion) and environmental programs ($6.8 billion) is far less than that directed toward the military, but military spending, “is not as effective at creating jobs,” the research group said.
Rhode Island received $207 million from the U.S. Department of Education in fiscal 2005, $138 million in federal food and nutrition services and $46 million from the U.S. Environmental Protection Agency, for a total of $391 million, or 40.8 percent of the $959 million in military spending the state and its residents received that year.
Massachusetts received $1.20 billion in education aid, $680 million in food and nutrition aid and $284 million in EPA spending, for a total of $2.17 billion or 22.9 percent of its $9.46 billion in total military spending.
Connecticut received $468 million in education aid, $372 million in food and nutrition services and $42 million in EPA spending, for a total of $882 million or 9.3 percent of the state’s $9.52 billion in military spending that year.
“A new report by the Political Economy Research Institute shows that public spending on education creates more jobs that are higher paying than the same amount of money spent on the military,” the NPP said. “Public spending on other areas such as health care and energy efficiency also create more jobs than the equivalent amount spent on the military, though the jobs have lower pay and benefits. Nevertheless, the overall economic impact in terms of wages and benefits is much higher.
“Moreoever, investing in renewable energy and conservation, health care and education can have considerable impact on technological developments, work force skills and infrastructure, all of which will support further economic growth and development.”
The National Priorities Project report “Federal Dollars: What came to – and feft – your state in 2005” is based on data from the Consolidated Federal Funds Report for fiscal 2005, released this month by the U.S. Census Bureau, plus reports from the U.S. Department of Energy, the Office of Management and Budget and the Internal Revenue Service. The NPP is a research organization, based in Northampton, Mass., that focuses on the local impact of federal spending and other policies. To learn more, visit www.nationalpriorities.org.

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