Washington First Means Keeping Our Dollars HERE – Not in D.C.

Being a "donor state" means a state pays significantly more in federal taxes (from residents and businesses) than it receives back in federal spending on programs like Medicaid, Social Security, Medicare, infrastructure grants, education aid, defense contracts, and more. Donor states effectively subsidize recipient states.

Recent data (including FY 2024 from USAFacts and analyses from the Rockefeller Institute) shows around 19 states qualify as net donors in typical years, though numbers fluctuate with economic conditions, pandemics, or policy changes. The largest imbalances include:

• California: Net outflow of $275.6 billion

• New York: Net outflow of $76.5 billion

• Texas: Net outflow of $68.1 billion

Washington state is also a consistent donor state. In recent analyses (e.g., Rockefeller Institute data around 2022–2024 periods, excluding heavy COVID relief), Washington shows a net outflow, with per capita balances among the most negative in the nation (e.g., around -$3,494 per person in some adjusted figures, or roughly $0.59–$0.70 returned per dollar paid in taxes). On a per-person net contribution basis, Washington often ranks high (e.g., $7,139 net contribution per resident in some USAFacts metrics). Other frequent donors include New Jersey, Massachusetts, Connecticut, Illinois, and Minnesota. By contrast, states like Virginia (+$89 billion net received), Alabama, South Carolina, New Mexico, and Kentucky are major recipients.

Here’s what a donor state — including Washington — effectively loses:

1. Billions in Direct Net Financial Loss (Opportunity Cost)

The biggest and most obvious loss is pure money leaving the state. For Washington, this net outflow (often in the tens of billions annually in non-emergency years) represents funds that could stay local.

This money is unavailable for:

• State tax relief (Washington already lacks a broad income tax, relying heavily on sales and business taxes)

• Debt reduction

• Direct investments in schools, hospitals, public safety, or housing affordability

• Boosting local economic circulation and job creation

Washington's strong economy (tech giants like Microsoft and Amazon, aerospace via Boeing, trade through ports) generates high federal tax revenue through high-wage jobs and corporate activity, but much of it flows out rather than returning proportionally.

2. Strained Infrastructure and Public Services

Donor states like Washington often receive less federal matching funds relative to contributions for:

• Highways and bridges (critical in a large, mountainous state)

• Public transit, ferries, and airports

• Broadband expansion (vital in rural areas)

• Ports and trade infrastructure

Even with need-based formulas, the overall imbalance means Washington subsidizes projects elsewhere. Residents pay high federal taxes that fund roads, bridges, and water systems in recipient states, while facing backlogs in their own (e.g., aging infrastructure in the Cascades or Puget Sound region). Education grants, research funding (NIH, NSF), and disaster relief (earthquakes, wildfires, floods) can also feel disproportionately low compared to contributions.

3. Higher State and Local Taxes or Fees to Compensate

Because federal dollars don't return proportionally, donor states like Washington must rely more on state/local revenue sources to maintain services. Washington already has among the highest sales taxes in the nation and significant business & occupation taxes to offset no state income tax. High federal burdens (from progressive taxation on high earners in tech/finance) compound this.

This creates:

• Reduced competitiveness for attracting/retaining businesses and high earners

• Talent retention challenges (brain drain to lower-tax states)

• Residents feeling overtaxed overall

4. Broader Economic and Growth Impacts

• Business and Investment Climate — Persistent net outflows contribute to perceptions of high overall burdens, which can deter expansion despite Washington's innovation strengths.

• Innovation Hubs vs. Redistribution — Tech/powerhouse economies (like Washington's Puget Sound region) generate disproportionate federal revenue but see less proportional return — seen by some as penalizing economic success.

• Long-Term Fiscal Pressure — Chronic donor status adds strain during recessions, natural disasters, or federal policy shifts (e.g., changes to deductions or spending priorities).

Why Does This Happen?

Donor states like Washington tend to have:

• Higher average incomes

• Stronger economies (tech, aerospace, agriculture exports, international trade)

• More high earners paying top federal tax rates

Recipient states often have:

• Lower per capita income

• More retirees (Social Security/Medicare)

• Higher poverty rates (Medicaid)

• Heavy military/defense presence

The federal system redistributes nationally for equity and national priorities, but the imbalance leaves donor states footing a larger share.

The Bottom Line

Being a consistent donor state like Washington means losing control over significant resources and effectively transferring wealth to other parts of the country. This fuels debates about tax reform, spending formulas, block grants, or devolving more power (and money) to states.

While national unity, defense, Social Security, and interstate commerce provide broad benefits everyone shares, the raw fiscal imbalance represents a real, quantifiable loss for donor states year after year.

If you're in Washington or another donor state, this directly affects your taxes, infrastructure, and economic opportunities.

Sources & Further Reading:

• USAFacts (FY 2024 data and per-capita contributions)

• Rockefeller Institute of Government Balance of Payments reports (detailed state analyses, including recent years showing Washington as a net donor)

• Various 2025 analyses confirming Washington's donor status in non-emergency periods