Alabama ranked 3rd most federally dependent state

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With the tax deadline less than a month away, the personal finance website WalletHub followed up on its report on the States with the Highest & Lowest Tax Rates with an in-depth analysis of 2016’s Most & Least Federally Dependent States to determine how dependent states with the lowest tax rates are compared with those paying the highest.

The results? For a state that pride’s itself on conservative, small-government values Alabama and Uncle Sam are a lot closer than many Alabamians would imagine.

According to the analysis, Alabama ranked as the 3rd most federally dependent state in the nation, relying heavily on Uncle Sam to support the state’s finances.

Federal Dependency of Alabama (1=Most, 25=Avg.):

  • 3rd: Return on Taxes Paid to the Federal Government
  • 9th: Federal Funding as a Percentage of State Revenue
  • 9th: Share of Federal Jobs

While not the results many would expect from a Red State — one that voted Republican in the 2012 presidential election — with an average dependency ranking of 17.13, WalletHub found Red States are altogether more reliant on federal funding than Blue States, which ranked 33.23 on average.

The revelation of federal dependence where bold, efficient stewardship was once thought to preside, begs the question: Are Alabamians being taxed appropriately? With an $85 Medicaid shortfall in the General Fund budget and a special session on the horizon, it’s a question the Alabama Legislature will soon face.

As for how neighboring states fared, Alabama was in good company — Mississippi ranked the most federally dependent state in the nation, Louisiana 4th and Tennessee 5th.

Here’s how Alabama compares to the rest of the country:

Source: WalletHub

In order to identify which states most and least depend on federal support, WalletHub’s analysts compared the 50 states across across across two key dimensions, namely “State Residents Dependency” and “State Government Dependency” looking at 2013-2014 data collected from the Internal Revenue Service, U.S. Census Bureau, USAspending.gov, Bureau of Labor Statistics and Governing.com.

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