Washington sends federal tax dollars to Washington, D.C.
Federal dollars also flow back into Washington State.
The difference can be measured.
We call that relationship Washington State's federal Balance of Payments.
THE FEDERAL-STATE RELATIONSHIP
Article I, Section 8 of the U.S. Constitution (1789) grants the federal government the authority to collect taxes for the purpose of funding national obligations and providing for the “general welfare of the United States”.
The 16th Amendment (1913) to the Constitution further confers upon the U.S. Congress the power to tax income in order to ensure the solvency of the federal government, and ostensibly to continue providing for the general welfare.
Over the ensuing decades the federal taxation of U.S. citizens and businesses has become ever more necessary as programs designed to ensure the general welfare and attend to the obligations of the U.S. population that transcend the capabilities of individual states—national defense, for example—have grown.
In theory, the population of each state contributes its share to the financial burden borne by the U.S. government as the federal government executes duties related to the benefit of the entire nation.
Citizens of individual states rely upon representatives elected to the U.S. Congress to ensure a fair apportionment of their tax dollars to worthwhile national causes and the solvency of individually earned federal benefits such as those guaranteed by the Social Security and Medicare programs.
It is more or less expected that these representatives elected to federal office will also work to direct federal expenditures – those intended to provide for the general welfare – to human and business assets in their districts that can contribute to federally funded initiatives.
If one were to look (idealistically) at the United States as a closed system for the purposes of federal taxation policy, tax revenues collected by the federal government are distributed back to the economies of each state based upon the resources and capabilities individual states are able to provide to fulfill the strategic plans developed at the federal level.
It stands to reason that each state, at governmental, business, and individual levels, seeks to develop capabilities and resources by which they contribute to strategic programs authored at the federal level – and thus are able to retrieve federal tax dollars while contributing to the national welfare.
MEASURING THE BALANCE
On this basis it is possible to conceive of a measurable entity that incorporates taxes contributed by each U.S. State to the federal coffers and those returned. This entity can be easily formalized as:
In other words, the difference between (1.) federal tax payments returned (R) to a given state in a given year, and (2.) revenues collected (C) by the U.S. federal government in the form of taxes paid by individuals and businesses in a given state in a given year, gives us (3.) the “Balance of Payments” (B) with regard to that state for that (fiscal) year.
WHAT DOES THE BALANCE MEAN?
B > 0
NET RECIPIENT
More federal dollars returned than collected
B < 0
NET DONOR
More federal dollars collected than returned
In the case where this entity is greater than zero, it can be said that the state in question is a “Net Recipient State”, where the state has realized a net influx of federal dollars. In the case where the entity is less than zero, the state has realized a net outflow of dollars as defined and can be categorized as a “Net Donor State”.
WHAT DOES THE EVIDENCE SAY?
The data necessary to determine a state's federal Balance of Payments is publicly available from federal sources, including the Social Security Administration (SSA), Bureau of Economic Analysis (BEA), Internal Revenue Service (IRS), and USAspending.gov.
In fact, two non-partisan research organizations have recently compiled data to calculate the Balance of Payments for each U.S. state.
Both organizations conclude that Washington State is a Net Donor State.
ROCKEFELLER INSTITUTE OF GOVERNMENT
–$3.8 BILLION
Washington's average annual Balance of Payments, FFY 2015–2023, excluding COVID-19 spending.
Source: Rockefeller Institute of Government, Giving or Getting? New York's Balance of Payments with the Federal Government (2025), Table 1.
USAFacts
–$57 BILLION
Washington's FY 2024 balance of funds between residents and the federal government.
Source: USAFacts, Which states contribute the most and least to federal revenue? (2025), FY 2024 analysis.
NEW YORK STATE ASKED THE QUESTION.
The Rockefeller Institute's Balance of Payments work grew out of a long-standing New York concern with the state's fiscal relationship with the federal government, associated historically with Senator Daniel Patrick Moynihan's efforts to understand the flow of federal funds into and out of New York.
New York State now incorporates Rockefeller Institute Balance of Payments findings into official state budget analysis, where they are used to assess federal fiscal risks and inform discussion of federal funding priorities.
WHY DOESN’T WASHINGTON STATE?
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