$26 Billion of Taxation without Representation

A recent court decision gave the District of Columbia control over its local budget for the first time since home rule in 1972. At a time when support for D.C. statehood is at an all-time high (67 percent of residents are in favor ), the court’s decision has brought a renewed optimism to the District’s 51st state movement. The Mayor and Council are taking advantage of the momentum generated by the court decision to propose a new ballot initiative and legislation to further the statehood agenda.

We all know the District’s statehood battle cry – Taxation Without Representation – but how much do we actually pay to the federal government each year? In order to answer this question, we dug into the federal tax collections data. What we found is that District residents and businesses paid a whopping $256 billion in federal taxes since the IRS began to track the District’s tax collections separately from Maryland in 2002. In 2014 the District paid the federal government $26.4 billion which is likely the largest contribution in the city’s history. The District only received $3.5 billion in federal grants, payments, and court contributions in fiscal year 2014 – a difference of roughly $22.9 billion (this excludes matching federal funds such as those we receive for Medicare, but all states receive these). Since 2002, the annual tax paid to the federal government grew by $11.7 billion (an increase of 80%).

Annual Federal Tax Payment

In 2014 the District paid more federal taxes than 22 states and paid nearly the same amount as South Dakota, Alaska, Montana, Wyoming, and Vermont combined. Those states have 15 seats in Congress while the District has only one non-voting delegate.

Annual Collections Rank

Although some states pay more federal taxes than others, it does not necessarily translate into more congressional representation. In 2014, New Jersey paid $9.63 billion of federal taxes for each of its 14 congressional seats – the highest in the country. West Virginia on the other hand only paid $1.38 billion for each of its five congressional seats – the lowest in the country. If the District became the 51st state in 2014 and had three seats in congress, it would have paid the fourth highest amount of federal taxes per congressional seat.

Federal Taxes Paid for Each Seat

What exactly is this data?

The IRS Data Book is published annually by the IRS and contains statistical tables and organizational information on a fiscal year basis. The data used in this analysis is published by the IRS annually and is available here. We used data from the Comprehensive Annual Financial Report for 2014 to obtain total revenue and federal government contributions to the District. In order to calculate federal spending on the District’s judicial system, we collected information from the District of Columbia Budget Request Act and the Budget of the United States Government for 2014.

14 thoughts on “$26 Billion of Taxation without Representation

  1. “Although some states pay more federal taxes than others, it does not necessarily translate into more congressional representation. In 2014, New Jersey paid $9.63 billion of federal taxes for each of its 14 congressional seats – the highest in the country. West Virginia on the other hand only paid $1.38 billion for each of its five congressional seats – the lowest in the country. If the District became the 51st state in 2014 and had three seats in congress, it would have paid the fourth highest amount of federal taxes per congressional seat.”

    Currently – DC paid the most per congressional seat – $26.4 billion for ZERO seats.

    Like

  2. Sorry, but your datum — $26B in federal taxes paid by DC in 2014 — must be incorrect.

    A simple check is to divide that total by the number of residents, approximately 650,000. The result, $40k, is the per capita federal tax burden for DC. Obviously that is a preposterous number, and is almost as much as the DC per capita income ($46k), according to the US Census.

    I don’t know where the error is — perhaps you should check the IES figures more closely. But in any event, DC did NOT send the federal government $26B, in any meaningful way of accounting.

    Like

  3. Responding to prior poster: The per capita amount you arrived at that was paid by DC residents in federal income taxes is an average, not an absolute number for everyone. There are a fair number of people who earn very high salaries and live in DC AND the total listed here for $26B also includes business taxes. So, even while there are also a number of DC residents who have very low (or no) incomes, the taxes paid out over all earners and businesses in DC amount to a lot of money *on average* per person–but obviously not what every resident here is paying every year.

    Anyway, I am grateful for the analysis presented in this blog, particularly for the return of federal dollars to DC relative to what is paid by DC residents to the federal government. In all the decades I have lived here, among the most galling presumptions of those who wish to continue the blatantly unconstitutional situation we have here is the idea that somehow we DC residents are mooching off the federal government.

    (The other presumptions are, of course, that DC needs to demonstrate sound fiscal management/vote for more responsible people/have less crime/better laws before we can be “allowed” to have representation and that if we wish to have representation we should never have lived here in the first place (and, presumably for those unable to make such a choice, never given birth to children here nor raised them here). Nice to know that democracy has so many qualifiers.)

    Like

    1. Valerie, thanks for your counterpoint. However your argument holds for *every* state — in each, there is a wide distribution of income, with a (very) few extremely high earners. Each state also has its share of federal business tax. Nothing you wrote sets DC apart from any state.

      It is also important to bear in mind that, compared to almost every state, the population DC is quite small. DC does not have the population to pay $26B in federal taxes, as my calculations show.

      None of this takes away from the need for Congressional representation. But ubfortunately, this thrust of the article is undermined by the erroneous arithmetic.

      Liked by 1 person

    2. The businesses that are paying taxes in DC would not be able to vote, so saying DC should get representation in Congress on the basis of the taxes those businesses are paying (the income of which is earned, not in DC exclusively) is silly. You vote in the Presidential election, which is the only countrywide election. Where a corporate federal income tax is mailed does not mean that is where the income was earned, so it is misleading to say that DC sould be credited with those tax payments.

      There is nothing unconstitiutional about DC not being a state. It is a federal district.

      Further, it is also silly to contend that DC only receives $3.5 billion from the federal government. Twenty percent of residents receive food stamps and Medicaid. The federal government pays for roads and schools.

      Liked by 1 person

      1. I agree with your contention that saying “DC should get representation in Congress on the basis of the taxes those businesses are paying (the income of which is earned, not in DC exclusively) is silly.”

        DC should absolutely not get representation on that basis.

        Rather, it should get representation because the American citizens who live here (more than 600,000) pay taxes to a government in which they have no representation.

        Right now, no US citizen gets to vote for anyone in Congress on the basis of how much or little they pay in taxes to the federal government. They vote because they are citizens, period. That fundamental right is guaranteed for them without regard to how much in taxes they (or the businesses in their jurisdictions) pay to the federal government.

        The purpose of this piece, as I understood it, was to outline how much DC contributes to the federal treasury without having any say in it. When compared to actual states on a similar basis, as here, the amounts paid by DC are not small.

        A follow-up piece might outline how much this works out in terms of the payments of individual citizens versus payments by businesses.

        Still, none of that gets around the fact that no matter the amount it pays in taxes, DC still is being taxed without representation in the government to which it pays those taxes.

        Like

    3. One factor that you clearly are omitting from your analysis is that of the businesses that are being taxed on their high income that is being earned in DC, the overwhelming amount of it is earned extracting federal favors form the taxpayer. The rest of the country resents the fact that milking the federal taxpayer is the primary objective of all of the big money in DC.

      In the words of the man you elected to be president, “You didn’t build that.”

      Like

  4. tondo –

    Thank you for your comments. I provided a link to the IRS data within the blog post so that readers can see the data I used. According to the IRS collections table, the District did indeed pay $26 billion in 2014, primarily through various income taxes. The total personal income for District residents in 2014 was $46 billion according to the U.S. Bureau of Economic Analysis which per capita is equal to $69,838.

    The total amount includes the following: Business income taxes, Individual income tax withheld and FICA tax, Individual income tax payments and SECA tax, Unemployment insurance tax, Railroad retirement tax, Estate and trust income tax, Gift tax, and Excise taxes.

    Like

    1. If you are counting FICA tax paid on a DC mailing address, don’t you have to add back all of the Social Security and Medicare outflows associated with DC residents and past residents on the money received by beneficiaries? If you are counting unemployment tax, don’t you have to count the unemployment benefits paid on the other side of the ledger?

      Your analysis is equivalent to someone complaining about paying a utility bill and ignoring the value of the electricity received.

      Like

    2. It would be nice if you posted a follow-on article, listing say federal tax remittances by state, for personal income. Then you would be comparing apples to apples.

      Like

  5. This is really helpful to know about our own individual state. I had no clue that New Jersey is the highest paying state for federal taxes. I totally thought it would be California or New York. I think it is ridiculous though that they pay more but don’t have higher congressional representation.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s