WalletHub: Louisiana 12th most financially dependent on federal government

Louisiana is the 12th most dependent state on the federal government economically in contrast to the rest of the country, according to a new report from the personal finance site WalletHub.

With Tax Day postponed to July 15 and states having received hundreds of billions of dollars in federal aid during the COVID-19 pandemic, WalletHub released updated rankings for 2020’s most and least federally dependent states.

This report illustrates the extent states are independent economically. However, states with a higher level of federal dependence are likely better positioned to handle the coronavirus pandemic, given that most relief has come from the federal government, according to WalletHub.

In order to identify which states most and least depend on federal support, WalletHub compared the 50 states across three key metrics.

— Return on taxes paid to the federal government

— Federal funding as a share of state revenue

— Share of federal jobs

The top three states ranked 2020’s Most & Least Federally Dependent States were #1 New Mexico, #2 Kentucky and #3 Mississippi.

Key Stats

  • With an average dependency rank of 20.97, Red States are altogether more reliant on federal funding than Blue States, which rank 32.85 on average. (The lower the rank, the more dependent the state.)
     
  • There is a 54.04 percent correlation between a state’s federal dependency and its per-capita GDP. That means the least wealthy states tend to receive the most federal support.
     
  • Illinois is the sixth least federally dependent state, which helps explain the fact that it has the highest tax rates in the nation. On the flip side, Alaska is the sixth most federally dependent state and has the lowest tax rates.

More data and information on the report can be found here.