Maine Ranks as 13th Most Dependent State on Federal Tax Dollars

Maine is the 13th most federally dependent state in the nation, according to a recent study published by WalletHub’s financial analysts.

The analysis, which is based on U.S. Bureau of Census data, highlights the varying degrees of federal aid reliance among states.

Although the analysis found that “Red States” tend to be more reliant on federal tax dollars than “Blue States”, Maine is one of the Democrat-controlled states that bucks the national trend.

To determine the levels of federal dependency, WalletHub evaluated states across three critical metrics: the return on taxes paid to the federal government, federal funding as a percentage of state revenues, and the proportion of federal jobs. The degree of federal dependence was then calculated based on the ratio of federal taxes paid versus federal dollars received.

The report places Alaska at the top of the list as the most federally dependent state, followed by New Mexico and Kentucky. On the other end of the spectrum, New Jersey claims the title of the least federally dependent state, with California and Kansas also ranking low on federal reliance.

One of the key findings of the report is the significant correlation between a state’s federal dependency and its per-capita Gross Domestic Product (GDP). The analysis shows a 55.5 percent correlation, indicating that states with lower per-capita GDPs tend to receive more federal support. This trend underscores the financial dynamics between wealthier and less wealthy states in terms of federal aid.

Additionally, the report reveals that, on average, states traditionally voting Republican are more reliant on federal funding than those leaning Democratic. Red States have an average dependency rank of 20.92, making them more dependent compared to Blue States, which have an average rank of 30.08.

Illinois stands out in the study as the fifth least federally dependent state. This distinction is notable given that Illinois has the highest tax rates in the country. Conversely, Alaska’s position as the most federally dependent state is accompanied by the lowest tax rates, further illustrating the inverse relationship between state tax rates and federal dependency.

Check out the full study here.