California biggest "donor state" to rest of U.S.

Updated 2022 data shows $83 billion of federal taxes more than spending here

There are various ways to calculate which U.S. states are “donor states.” Donor states are states in which businesses and residents pay more in taxes to the federal government than the federal government distributes in spending there. The Nelson A. Rockefeller Institute of Government of the State University of New York keeps one such dataset, and it shows that California was, by far, the biggest “donor state” in 2022.

The Rockefeller Institute dataset shows that California and its residents and businesses paid $692 billion in taxes to the federal government in 2022 and received $609 billion in federal funding. The $83.1 billion difference between those two figures made California the biggest donor state by far in 2022, surpassing the #2 donor state New Jersey by nearly three-to-one. On a per capita basis, California was the #4 donor state at $2,129 per capita, trailing Massachusetts ($3,873), New Jersey ($3,123), and Washington State ($2,289).

The $83.1 billion figure includes COVID funding, which was still making its way through the pipeline in 2022. If COVID funding were excluded, the Rockefeller Institute calculates, California would be a much bigger donor state, with only $566 billion in federal funding flowing to the state, compared to $692 billion of taxes paid by Californians (a difference of $126 billion flowing, essentially, to benefit other states). During 2020 and 2021, COVID and other federal deficit spending was so significant that all 50 states became recipient states temporarily, with federal funding exceeding taxes paid—including in California. The 2022 data, with COVID funding receding, shows California returning to a more typical big donor state position. In the five years prior to the pandemic, California was one of the top five donor states each year.

According to a recent Rockefeller Institute report, states that have a disproportionately large percentage of high-income earners “inherently pay more in Federal personal income taxes.” California has a significant share of the nation’s highest-income earners, which generate significant revenues via the progressive personal income tax rate structures in both federal and California state law. Higher-income states like Virginia can offset these issues in the donor/recipient state calculation because of the large number of federal employees and government contractors there. “Other states, such as New Mexico and Kentucky, have lower income levels but high levels of Federal spending due to large government and military facilities or large numbers of government contractors.”

In the 2022 Rockefeller Institute data now on its website, including federal funding for COVID, Virginia was the #1 recipient state, receiving $108 billion more in federal spending in 2022 than its residents and businesses paid in federal taxes. Maryland was #2 at $81 billion, Texas was #3 at $71 billion, and North Carolina was #4 at $53 billion. On a per capita basis, the top recipient states were New Mexico, Maryland, Virginia, Alaska, and West Virginia.