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Central States—as well as for the 10 richest and 10 poorest States. The New England States get back about two-thirds in expenditures, one-third in loans closed, and 37 percent insured as the country generally. Roughly the same percentages hold for the relation of the New England States and the South Atlantic States; but in relation to the East South Central, the percentages received back by New England are less than one-third, one-tenth, and less than one-third, respectively, than Federal expenditures, loans closed, and loans insured. In relation to 5 major Southern industrial States, New England received back in expenditures one-third as much relative to taxes borne, and Connecticut, Massachusetts, and Rhode Island received back only 21, 37 and 30 percent, respectively, as much as the Southern States.
16. The 10 richest States, with 43.5 percent of the income of the Nation, accounted for 49 percent of the tax incidence and received back only 59 and 51 percent as much in Federal expenditures and loans closed respectively in relation to taxes borne vis-a-vis the country's totals. The 10 poorest States accounted for 7.5 percent of the taxes, 9.6 percent of the income, and received back 2.3 as much relative to taxes borne in expenditures and 3.2 times in loans closed as the total for the country.
Federal tax payments and Federal expenditures, loans closed, and loans insured
per $1,000 of taxes paid, fiscal 1939, New England, South Atlantic, and EastSouth-Central States
Alabama. Kentucky. Mississippi
Tennessee. 10 richest.. 10 poorest..
2, 533. 12
322. 63 2, 718.06
181.37 163.16 262. 33 226. 52
2, 692, 225
1 Includes expenditures for the Agricultural Adjustment Administration, the Farm Security Administration, the Soil Conservation Service, the land utilization program, agricultural experiment stations, agricultural extension work, colleges for agricultural and mechanical arts, foresr funds, forest roads, the Public Roads Administration, the Civil Conservation Corps, Indian service work, the Bureau of Reclamation, the Public Buildings Administration, the Public Works Administration, the Work Projects Administration, the National Youth Administration, the Social Security Act, rivers, harbors and food-control programs, Mineral Lease Act payments, vocational education and rehabilitation, the U. 8. Employment Service. Btate marine schools, Federal Water Power Act payments, State homes for disabled soldiers and salors, the National Guard, the Veterans' Administration, and the value of surplus agricultural commodities distributed
2 Includes loan, closed by the Reconstruction Finance Corporation, the Farm Credit Administration, the Commodity Credit Corporation, the Farm Security Administration, the farm tenant-purchase program, the Rural Ēlectrification Administration, the Public Works Administration, the Disaster Loan Corpora. tion, the Federal Reserve Board, the Home Owners' Loan Corporation, and the U. S. Housing Authority.
Includes loans insured by the Federal Housing Administration under title I and title II.
Aside from rounding error, the detail should add to this total; it is for the continental United States, excluding United States Territories.
Sourots: see first table on 1939,
A study of taxes and expenditures for 1952%
17. Obviously a study of all expenditures, not merely grants and aids upon which we have concentrated so far, yields somewhat different conclusions than the more limited study. The broader study includes the large volume of market transactions—in particular Government purchases of goods and services. Since a large part of the purchases are manufactured products related to war, the incidence of these outlays is to be found primarily in the industrial States Hence a broad analysis of Federal outlays reveals outlays more closely related to income, though still greatly exceeding tax contributions of the poorer States than a study restricted to grants and aids.
18. Outlays for natural resources tend to favor the sparsely populated and on the whole the poorer States, and this generalization holds also for highway outlays and assistance programs. The poorer States also profit disproportionately from Federal loans and even guaranties. But under insurance programs, and notably OASI and unemployment compensation, the wealthy States seem to profit from disbursements at least equal to their share of income. They gain disproportionately, then, from Government purchases inclusive of interest pas. ments; at least proportionately from insurance programs; and lose heavily from the Government programs of grants and assistance, whether administered through State or local governments or paid directly to individuals. In a general way, it may be said that the richer States gain from market transactions and lose through grants and aids. Revenue incidence and Federal es penditures
19. In the table below, Miss Mushkin and Miss Crowther compare the inci. dence of revenue and of expenditures. In their analysis they estimate expendi. tures on a benefit and an incidence basis. Under the former the criterion is who benefits from a program (e. g., under a military program it is assumed all share equally); under the latter criterion, the test is who gets the cash poured out by the Federal Government. On a Government contract, the relevant point would be where the item is produced.
20. Obviously, the results can only be roughly accurate; for all kinds of assumptions and estimates are involved. The crude figures for disbursements at least are accurate; they tell us amounts received by each State. The benefit disbursements require allocations according to benefits; the incidence figures tell us who profits from the disbursement, not necessarily where the contract is made.
21. In the table below, adapted from the Mushkin-Crowther study, the comparison is of revenues and intermediate expenditures—the latter an average of the benefit and incidence expenditures. It will be noted that whereas New England accounts for 8.08 percent of revenue, she receives but 6.175 percent of the expenditures. Maine alone of the New England States receives as much relatively as taxes borne.
22. The Middle East is roughly in the same position as New England, with the percentage of revenue exceeding that of expenditures by about one third, New York's revenue contributed exceeds that of its expenditures by 60 percent.
23. The Southeast and Southwest profit greatly. Their expenditure receipts exceed their revenues by 63 and 44 percent, respectively. Relatively, the Southeast's expenditure-revenue is more than twice that of New England. The ratio of expenditure receipts to revenues for the sparsely settled Northwest is 179 percent. In the Central States, with large segments both industrial and agri. cultural, revenues borne exceed Federal disbursements by 9 percent; and in the Far West, there is roughly a balance.
24. Variations in expenditures per capita are much greater than in revenges. In 1952, Federal tax burdens ranged from $112 per capita in Mississippi to ! times as much, or $1,015, in Delaware. The range of benefit expenditures was from $403 to $573 per capita. In another survey where revenues and benefit expenditures are compared, the differences between New England and the Middle East, on the one hand, and the South, on the other, is much greater than in the comparison of revenues and the intermediate estimate (benefits and incidence averaged). But a comparison of revenue and expenditure on an incidence basis yields a somewhat smaller difference, the explanation being the large amounts of Federal contracts, accruing to the industrial States and reflected greatly in the incidence totals. But the ratio of expenditures to revenues for the Southeast vis-a-vis New England is still almost twice as great.
6 What follows in this section on 1952 is primarily based on statistical materials by Miss Mushkin and Miss Crowther (now in mimeographed form); but the arrangement and analyses is by S. E. H. I owe much to their study, which they kindly allowed me to use.
Estimated incidence of Federal cash revenue and intermediate estimate of
Federal expenditures, by State and region, fiscal year 1952
1 See Measurement of the Distribution of Federal Expenditures and Revenues, by State for explanatory notes on allocation of incidence among States.
2 Based on table 1 (Mushkin-Crowther study) with total cash payments to the public adjusted to a Daily Treasury Statement basis.
3 Represents the percentage distribution of positive amounts only shown in the column on excess incidence.
NOTE.- Amounts may not add to totals because of rounding.
25. The next table shows revenue burdens (somewhat more inclusive than taxes, for revenue per capita is $135 and taxes $412). The percent of United States average varies from 29 percent from Mississippi to 238 for Delaware. Whereas New England's revenue incidence is $577 per capita and the Middle East $583, the averages for the Southeast, Southwest, and Northwest are $239, $317, and $332, respectively.
Estimated per capita Federal revenue and tao incidence, by State and region,
fiscal year 1952
26. In the next table, the material for States with incomes above average and those with incomes below average are given. The former (20 States) bore 72 percent of the burden of Federal revenues, but profited only from 57.3 to 61.5 percent of the expenditures, depending upon the manner of measuring expenditures. The 29 States with incomes below average accounted for 28 percent of the revenue burden and profited from 38.5 to 42.7 percent of expenditures. Relatively, the poor States received 75 percent more in relation to revenues contributed than the rich States. This division of States with above or below average income minimizes the differences. A comparison of such wealthy States as New York and Connecticut with such States as Alabama and Tennessee reveals much greater differences. An interesting point is that the 3 poorer New England States (New Hampshire, Vermont, and Maine) contribute $717 million and receive back only $670 million (the intermediate estimate). This is unusual for States with less than average income. Rhode Island, a State experiencing difficult transitional problems, pays out $123 million, or 37 percent, more than she gets back. Connecticut and Massachusetts pay out $1,103 million more than they receive back, and New England $1,273 million.
Estimated distribution of Federal expenditures (3 illustrative estimates) and
revenue incidence, by state per capita income
(Amounts in millions)
Distribution of Federal payments by types
27. Federal income payments as classified by the Department of Commerce exclude purchases of goods and services. The table below suggests that New England's share of Federal income payments roughly corresponds to its share of income; but these Federal payments are much below (443 percent of the total) its income share (642 percent) of military and civilian pay and somewhat above in payments from trust funds and other. In general, Federal income payments are heavy for the Southeast. Thus, though her share of income is about twice that of New England, her share of these Federal income payments is 342 times as great; and the Southwest, with about the same percentage of income as New England, receives about 80 percent more in these payments.
Federal Government income payments, calendar year 1952 ?
State and region
Public assistance grants
Continental United States.
$27, 282. 5
New York. Southeast
242. 2 171.3 907.8
69. 7 164.5 51. 2
54.0 82.4 355. 2 16.2 70.7 14.9
81.3 505.0 50.0 88.4 33. 4
9.4 7.6 47.6 3.5 5.4 2.9
543. 4 638.7 475.5 349.7 482.9
257.7 358.8 206. 1 189.0 203.5
261.6 241.5 247.0 145.7 252. 6
24, 1 35. 4 22. 4 15.0 26.8
Illinois. Northwest. Far West.
2, 290.8 1, 499.4 5, 653. 1 1, 359. 4 1, 517.5 3, 705.9
1, 268. 2
813.9 1, 865.8
739.8 2, 167. 1
583.7 3, 483. 4
699.0 1, 353.5
71.8 303.9 56. 1 78. 7 185.3
1 All figures are from Office of Business Economics, Department of Commerce, except those on public assistance, which are from Social Security Bulletin, September 1953, p. 61.
2 Includes net military pay and gross wages and salaries of civilian employees less contributions for disability insurance and retirement.
3 Includes interest payments to individuals, benefits paid from social insurance trust funds (old-age and survivors insurance, railroad retirement, railroad unemployment insurance, railroad cash sickness, civil service and other Federal retirement programs, State unemployment insurance), veterans' subsistence, interest payments on veterans' loans, military reserve pay, adjusted service bonds, military retirement pay, allowances and allotments, mustering out pay, terminal leave pay, national service life insurance special dividends, payments by War Claims Cominission, veterans' indemnity payments, and payments to farmers (Federal payments classified by the Oilice of Business Economics as income to self-employed farmers, including some $30 inillion classified as rental income).
* In judes Federal share for assistance and administration of old-age assistance, aid to dependent children, aid to the blind, aid to the permanently and totally disabled, and general assistance programs.
28. A table giving the facts for military procurement and construction contracts further clarifies the issues. In this field—and especially for the years 1950-54 (July 1950–March 1954)--New England's experience has been satisfactory. She received 8 percent, or $8.1 billion, of $101 billion of military procurement and construction contracts. Here her total exceeds the Southeast by almost 20 percent and the Southwest by about two-thirds. Connecticut, in particular, is in a favorable position. Her receipts amount to 4.3 percent of the Nation's total as compared to but 2.6 percent for Massachusetts. (In Federal Government income payments, Connecticut's proportion was 0.9 percent and Massachusetts 3.0 percent.)