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1984 Memorandum on Allocation of the Federal Tax Burden and Federal Grants-in-Aid by State 1 (1984)

handle is hein.tera/mallocbufe0024 and id is 1 raw text is: MEMORANDUM ON THE ALLOCATION OF THE FEDERAL TAX BURDEN AND FEDERAL GRANTS-IN-AID BY STATE Fiscal Year 1983 This memorandum presents a state-by-state comparison of Federal tax burdens with Federal grants-in-aid to state and local governments for fiscal year 1983. The tax burdens in this comparison total $88,766.6 million for all states and reflect the cost of the Federal grants programs only; total Federal tax burdens in fiscal 1983 were $580,619 million. The tax burdens are estimates by the Tax Foundation, based on a special formula that measures the final geographic burden of taxes, as distinguished from the area of initial tax impact (the state from which the taxes are collected), as explained below. The data on grants-in-aid are derived from Federal Expenditures by State for Fiscal Year 1983, prepared by the Governments Division, Bureau of the Census, U.S. Department of Commerce. The Tax Foundation adjusts the U.S. total for Federal grants-in-aid, as shown in the Census report, by deducting figures for U.S. Territories, undistributed amounts, and for shared revenues, such as receipts from public lands and Federal payments in lieu of taxes on Federal lands. The 1983 Comparisons of Federal Tax Burdens and Federal Grants-in-Aid Table 1 presents the results of these comparisons for fiscal 1983. The cost of supporting grant programs fell on the residents of 19 states whose aggregate Federal tax burdens to support grant programs exceeded the amount of grants received by their respective state and local governments. As a whole, the 125 million residents of the paying states paid $50,811 million in Federal taxes to support grant programs while their state and local governments received $41,230 million in grants, an average Federal tax burden of $1.23 for each dollar of grants received. The 108 million residents of the other 31 states and the District of Columbia paid, on the average, 80 cents in Federal taxes for each dollar of aid received by their state and local governments--$37,955 million in Federal taxes for $47,536 million in Federal grants. The progressivity of the Federal tax system tends to redistribute fiscal resources from higher income states to lower income states. In fiscal 1983, for example, a 1.0 percent increase per capita personal income in the states was generally associated with a 1.25 percent increase in per capita Federal tax burdens. Although there was a tendency for states with high per capita tax burdens to pay more in taxes per dollar of aid received, the association was not as strong as might be expected (the rank correlation coefficient between the two variables of .458 indicates that the association was positive, but relatively weak). It should be emphasized that these comparisons of Federal tax burdens for aid payments per $1.00 of assistance do not actually indicate the entire