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The position of New York, 1954

55–56. New York's net transfers are even larger than New England's, in part because of her higher income and in part (related) her higher taxes. For grants to States and local units, for exampple, New York's figure is 44 against 69 for New England. Ten richest and ten poorest States, 1954

57–59. In 1954, the 10 richest States received much more Federal funds than the 10 poorest States. But when allowance is made for relative incomes, the 10 richest States received but 58 percent as much of Federal expenditures as the 10 poorest and on the basis of taxes borne, only 42 percent. Of 75 programs, in only 3 did the rich States get back a proportion in excsess of the ratio of taxes borne. A comparison of 1954 and 1953

60. Finally, we compare the results in 1954 with 1953. Though there are numerous differences in individual programs, the totals are not far apart.

Then follows the important master table, which gives the details by regions
and States of disbursements and relation of disbursements to income and taxes
borne for 75 programs, each involving more than $10 million, costing close to
$30 billion in all. The major omission is Government purchases in the open
market; but these are covered in the 1952 survey. Here we have a breakdown
which highlights the shares of Government grants, grant outlays within a State,
Government loans, and Government insurance.
With kind regards, I am,
Very sincerely yours,

SEYMOUR E. HARRIS.
Enclosure.
TAXES AND TREASURY DISBURSEMENTS,” REGIONAL AND STATE DIFFERENCES,

1934–54, 1939, 1952, 1953, 1954

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Seymour E. Harris, Chairman of the New England Governors' Textile Committee

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CONTENTS

Paragraph Taxes borne, 1934-54..

1-3 Federal disbursements (aid programs) in relation to taxes borne, 1934–54 (States

with lowest and highest relative disbursements). Same comparison : New England and the competitive South.

6 Ten richest and ten poorest States--

7 Expenditures, loans closed, and loans insured, fiscal year 1939

8-12 1939: Federal expenditures, loans closed, and loans insured, 10 Northern and 10 Southern and Western States-

13-14 Taxes borne and Federal disbursements..

+

1

15-16 A study of taxes and expenditures for 1952

17-18 Revenue incidence and Federal expenditures

19-24 Tar burdens

25-26 Distribution of Federal payments by types..

27-31 Federal disbursements and national income, 1954

32-45 Disbursements in relation to taxes borne

46-51 Taxes and disbursements, comparison of New England, the Nation, and the South 52-54 New York---

55-56 Ten richest and ten poorest States

57-59 A comparison of 1954 and 1953.

60 Master table

61 1 I am indebted to the New England governors for providing the funds which made this study possible; to Mr. Peter Kenen, a graduate student at Harvard University, who supervised the statistical work and needled at least 25 agencies in Washington for information ; to Mrs. Joan Eckstein for much research help; to the wonderful contributions of the Harvard Computational Laboratory and, in particular, to Mr. J. E. Van Tassel, Jr., its manager : to Mrs. Anda Thorpe for the typing; and to the members of the New England Governors' Textile Committee, who have given me much independence in carrying on and much useful advice at all times. The Byrd committee's work has also been very helpful, and I should give special thanks to a number of economists who have allocated taxes on an incidence basis, but especially to Miss Mabel Newcomer and to Miss Selma Mushkin (assisted by Miss Crowther), of the Public Health Service, who is the latest of this group of pioneers.

69096_56-pt. 1-431

Taxes borne, 1934-54

1. In this study we estimate the relation of Federal taxes borne (i. e., taxes paid corrected for passing on of the burden to others) and Federal expenditures. We have depended upon the Sundelson-Mushkin and the MushkinCrowther studies of incidence for 1939 and 1952, respectively. On various assumptions of incidence (e. g., who pays the corporation income tax) they obtain results which allocate the burden of taxes. For our 1934–54 study we de. pend in varying degrees upon these 2 studies for a determination of the taxes borne by these States in the 5 periods covered in the table below. The 1934-51 figures of expenditures are derived from the Byrd study, and the 1952–54 totals are obtained from the Annual Report of the Secretary of the Treasury on the State of the Finances for the fiscal years 1952, 1953, and 1954. Tax incidence inderes-Percentage of United States taxes borne by each state,

fiscal 1934-54

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0. 5.5.5 .385

465 9. 002

9713 2. 119

.834

.502

7. 445

. 765 2. 231 .723

910 1. 484 1.058

.225 7. 451 1.852 1. 232

1.717 1. 2:32

0.773
.308

. 400
7. 963

.811 2. 193 .649

. 938 1. 562 1. 116

..239 7. 492 1. 969 1.301

.831 1. 004 1.042

. 582 1. 815 4. 297 4. 26+ 1.852

.395 2. 454 .359 . 694

7. 577 2 203 1. 438

. 760

2. 175 .613 . 935 1. 601 1. 145

.245 7. 514 2. 027 1. 335

.866 1. 014 1. 055

.568 1.816 4. 193 4. 341 1.831

.398 2. 456

. 972

1. (MS 1. 017

.527 1.817 3. 912

1.706

Alabama.
Arizona..
Arkansas.
California.
Colorado
Connecticut.
Delaware
District of Columbia.
Florida..
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana.
Maine
Maryland.
Massachusetts.
Michigan
Minnesota
Mississippi.
Missouri
Montana.
Nebraska
Nevada
New Hampshire.
New Jersey
New Mexico.
New York,
North Carolina
North Dakota.
Ohio.
Oklahoma.
Oregon
Pennsylvania.
Rhode Island
South Carolina
South Dakota
Tennessee
Texas.
Utah
Vermont.
Virginia
Washington
West Virginia
Wisconsin.
Wyoming

2. 463

.981 1.014

.609 1.815 4. 475 4. 112 1. 895

.390 2. 449 .361 659

157 .368 4. 290

187 19. 466 1. 210

.233 5. 559

0.813
.348

464
8. 477

.858 2. 156 . 577 .934 1.640 1. 175

. 254 7. 529 2. OS6 1.370

. 902 1.027 1.071

. 556
1.817
4. 098
4. 414
1. 809

. 402
2. 458
.359
. 730
. 162
. 346
3. 983

263
16. 978
1. 293

. 246 5. 690) .937

. 934 7. 838

A2 574 256 1.079 4. 005

292

214 1. 434 1. 441

783 2. 078

.3.56

.359
. 711
. 159

. 158

. 356 4. 137

.224 18. 227 1. 252

. 239 5. 626

.351 4. 061

.243 17.611 1. 271

. 241 5. 660 .939

161

333 3.833

200 15.755 1.333

250) 5. 761

. 945 .677

. 941 .805

.869

1. 061 7470

.619

8. 591

763 477 230

941 3. 574

251

8. 030 .801 . 549 .249 1.043 3. 899

1 146

8. 217
.722
. 525
.243
1. 009
3. 790
.271
. 216
1. 355
1.317

. 770
2. 089

. 281

310

. 217

.213

1. 277
1. 193

758
2. 101

. 215 1. 394 1. 379

775 2. 083

161

1. 511 1. 50+

793 2006

170

. 152

. 158

. 166

Total United States.

100.000

100.000

100.000

100.000

10. X

Sources: See text.

2 Sundelson and Mushkin, The Measurement of State and Local Tax Effort, Federal Security Agency, 1944, and Mushkin and Crowther, Federal Taxes and the Measurement of State Tax Capactiy, Public Health Service, 1954.

& S. Doc. No. 101. Reduction of Nonessential Federal Expenditures: Additional Report of the Joint Committee on Reduction of Nonessential Federal Expenditures, Congress of the United States on Federal Grants-in-Aid to States, 1952.

2. This table shows the tax burden of each State over 5 periods in the last 25 years. It will be noted that the rapidly growing States (e. g., California, Washington, Michigan, and most Southern States) now account for a larger part of the tax burden than in the early years; and that the slower growing States (e. g., those in New England, New York), a smaller part.

3. It is well to point out here that the New England States (notably Massachusetts) and the Middle Eastern States (notably New York) bear taxes substantially exceeding the proportion of income of these States. Federal disbursements (aid programs) in relation to taxes borne, 1934-54 (States

with lowest and highest relative disbursements) 4. The next table gives disbursements under some 140 programs of Federal aid to the States and aid payments to individuals within the States. Here it will be noted that these Federal expenditures for the Nation over the years 193454 equalled $118.47 per $1,000 Federal taxes. In general, the Federal expenditures were low in the richer States vis-a-vis the poorer States. The minimum of expenditures per $1,000 taxes borne was for Delaware ($36.62) and the maximum ($534.46) for Mississippi, or 15 times as great. For 10 rich States (largely industrial) the average was $69.46 per $1,000 Federal disbursements, or 60 percent of the national average. For 10 poor States (equally divided between Southern and Western States) the average was $370.53, or 5+ times as great as that for the 10 Northern States, inclusive of California, and 3 times the national average.

Federal disbursements, aid programs, per $1,000 taxes, 1934-54, 10 rich and 10

poor States 1. Delaware $36. 62 1. Mississippi.

$534. 46 2. Connecticut49. 93 2. North Dakota.

441.89 3. New York.. 54. 62 3. Arkansas-

438. 15 4. New Jersey. 61. 75 4. South Dakota.

402. 10 5. Maryland67.98 5. Idaho.-

331. 02 6. Rhode Island. 79, 83 6. Wyoming

330. 73 7. Illinois.. 81.04 7. Alabama__

312. 91 8. Massachusetts85. 60 8. New Mexico-

309. 59 9. California. 88. 63 9. South Carolina.

302. 55 10. Michigan.88. 73 10. Oklahoma-

301. 92

Total__ Average, 10 States..

694. 63

Total.
69. 46 Average, 10 States.-

3, 705. 32

370.53

The incidence of selected Federal programs, fiscal 1934-54

State

Aggregate

Federal expenditures

($1,000)

Aggregate
Federal tax
incidence
($1,000)

Federal expenditures per $1,000 or taxes (81)

312. 91 220.

207. 22 49. 43 36.62 109.66 122 11 233. 40 331. 02

SI 14 123. IN 160. 12 21 1 13 197.47 258. 72

Alabama.
Arizona..
Arkansas
California.
Colorado
Connecticut.
Delaware.
District of Columbia.
Florida.
Georgia
Idaho
Illinois.
Indiana.
Iowa.
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts.
Michigan.
Minnesota
Mississippi.
Missouri
Montana.
Nebraska..
Nevada
New Hampshire..
New Jersey
New Mexico.
New York
North Carolina
North Dakota.
Ohio.
Oklahoma.
Oregon
Pennsylvania
Rhode Island,
South Carolina.
South Dakota.
Tennessee.
Texas.
Utah
Vermont.
Virginia
Washington
West Virginia.
Wisconsin.
Wyoming

1, 541, 921

472, 735
1, 210, 598
4, 568, 341
1,076, 901

638, 176
120, 556

609, 558
1,211,371
1, 659, 257

506, 968 3, 645, 627 1, 564, 010 1, 402, 591 1, 163,011 1, 215, 800 1, 662,981

372, 763

736, 073
2,060, 689
2, 361.317
1,618, 784
1, 282, 530
2, 245, 810

616, 186
956, 822
175, 229

227, 824
1, 448, 536

504, 366 5, 401, 391 1, 554, 671

648, 955 3, 159, 733 1,682, 916

870, 857 4, 167, 438

317, 562 1,061, 367

620, 717 1, 513, 329 3, 945, 140

512, 018

189, 362 1,059, 211 1,374, 508

4,927, 695 2, 140, 098 2, 762, 951 51, 543, 822

5, 196, 904 12,780, 207 3, 292, 328 5, 557, 565 9, 920, 572 7, 109, 201 1,531, 543 44,982, 819 12, 655, 886 8, 293, 495 5, 507, 961 6, 156, 988 6. 427, 740 3, 253, 719 10, 827, 515 24,073, 567 26, 612, 428 10, 700, 317

2, 399, 692 14, 660, 675 2, 130, 551 4, 409, 237

956, 814 2,033,983 23, 459.766

1, 629, 156 98, 895, 477 7,779, 710

1,468, 577 34, 061, 456 5 574,017 5, 806, 538 46,028, 399 3,977, 951 3. 508, 040 1,543, 678 6, 554, 544 24, 292, 197 1, 770, 569 1, 276, 937 8, 691,092 8, 822, 283 4,680, 645 12, 360, 700

151.39 534 46 1.43 19 221

13 14 11201

309 59

3012

3612. 35 4412.10

162.40

145

781, 546 1, 480, 281

327, 833

991, 255

1.550 1 11676

Total, United States 1.

70, 788, 050

596,016,000

11&2

1 Detail will not add to total as territories and possess ons of the United States have been omitted from the detail but are included in the total.

Sources: See text.

5. Ten States with the largest Federal disbursements vis-a-vis taxes borne accounted, then, for almost 512 times as much relatively as the 10 States which profited least from Federal outlays vis-a-vis taxes borne. Among those especially profiting were 5 Southern States and 5 sparsely populated Western States which gain heavily from Federal road disbursements. Among the 10 States experiencing the largest net transfers to the Treasury were 4 Middle Atlantic States, 3 New England States, 2 Middle Western States, and 1 State from the far west. Same comparison: New England and the competitive South

6. In another compilation, we compare Federal expenditures (as defined aburet and aggregate Federal tax incidence for the New England, South Atlantic, and East South Central States. Federal payments per $1,000 of taxes collected 8. The material for this part of our study is drawn from the Office of Government Reports, Activities of Selected Federal Agencies, 1933–39 (these cover 60 percent of outlays). The year 1939 is studied because it was the last year when military outlays remained relatively small.

amounted to $118.77 for the country, $80.31 for New England, $146.64 for the South Atlantic States, and $277.14 for the East South Central. Significant for North-South competition are the ratios of 55 and 29 percent of New England vis-a-vis the South Atlantic and East South Central States. The large relative gains of the industrial South vis-a-vis New England are underestimated here, since the South Atlantic States include Delaware and Maryland. In fact, the figure for New England ($80.31) is but 31 percent of that for 5 major Southern industrial competitors of the North (North Carolina, South Carolina, Alabama, Georgia, and Tennessee). In other words, New England gets back from 140 Federal-aid programs over a period of 20 years less than one-third as much as was paid in vis-a-vis the receipts and payments of 5 major industrial rivals. Same comparison: 10 richest and 10 poorest States

7. Finally, the 10 richest States (on the basis of 1953 income) received back vis-a-vis taxes borne only 19 percent as much as the 10 poorest States.

The incidence of selected Federal programs, fiscal 1934–54, New England, South

Atlantic and East South Central States

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1 Detail will not add to total as territories and possessions of the United States have been omitted from the detail but are included in the total.

Sources: See previous table.

Expenditures, loans closed, and loans insured, fiscal year 1939

9. The next table gives Federal expenditures, loans closed, and loans insured. Again, we should note that the rich Northern States tend to account for a relatively small part of the Federal expenditures, loans closed, and loans insured. Below I compare relative incomes with relative amounts of the 3 variables listed here for 4 major Northern States and 5 major southern industrial States.

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