WASHINGTON (AP) — Republican leaders have spent months promoting the myth that red low-tax states are subsidizing blue high-tax states because of the deduction for state and local taxes.
An Associated Press Fact Check finds it's actually the other way around. High-tax, traditionally Democratic states (blue), subsidize low-tax, traditionally Republican states (red) — in a big way.
Republicans are trying to eliminate the deduction as part of the sweeping tax package working its way through Congress. They added back a deduction for up to $10,000 in property taxes, in a concession to Republicans from high-tax states such as New York and New Jersey. California Republicans are pushing to extend the deduction to local income taxes, too.
It is true that taxpayers in high-tax states benefit the most from the deduction. However, these states send far more tax dollars to Washington than residents in low-tax states.
In fact, most high-tax states send more money to Washington than they get back in federal spending. Most low-tax states make a profit from the federal government's system of taxing and spending.
HOUSE SPEAKER PAUL RYAN:
— Ryan said the rest of the country is "propping up profligate, big-government states."
— "States that got their act together are paying for states that didn't," the Wisconsin Republican said.
TREASURY SECRETARY STEVEN MNUCHIN:
— "We are getting the federal government out of the business of subsidizing states. That is going to impact high-tax states."
Connecticut residents paid an average of $15,643 per person in federal taxes in 2015, according to a report by the Rockefeller Institute of Government. Massachusetts paid $13,582 per person, New Jersey paid $13,137 and New York paid $12,820.
California residents paid an average of $10,510.
At the other end, Mississippi residents paid an average of $5,740 per person, while West Virginia paid $6,349, Kentucky paid $6,626 and South Carolina paid $6,665.
Low-tax red states also fare better when you take into account federal spending.
Mississippi received $2.13 for every tax dollar the state sent to Washington in 2015, according to the Rockefeller study. West Virginia received $2.07, Kentucky got $1.90 and South Carolina got $1.71.
Meanwhile, New Jersey received 74 cents in federal spending for tax every dollar the state sent to Washington. New York received 81 cents, Connecticut received 82 cents and Massachusetts received 83 cents.
California fared a bit better than other blue states. It received 96 cents for every dollar the state sent to Washington.
On average, states received $1.14 in federal spending for every tax dollar they sent to Washington. That's why the federal government has a budget deficit.
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