Study: MS ranked 2nd as most federally dependent state

Study: MS ranked 2nd as most federally dependent state
A report from the Mississippi Public Employees Retirement System warned of a money crisis in the future, saying the system will not reach its minimum goal of 80 percent funding by 2042. (Photo source: WDAM)

MISSISSIPPI (WDAM) - Mississippi ranked as one of the most federally dependent states in the U.S., according to a recent WalletHub study. The study determined that Mississippi ranked second as most federally dependent, while Kentucky came in first.

So, what does it mean for a state to be federally dependent? The study looked at the 2017 report of tax rates by state to find out how much Americans with the lowest tax rates depend on the government compared to those paying the highest. But the concept is more complex.

In the study, WalletHub asks the question, "What if, for example, a particular state can afford not to tax its residents at high rates because it receives disproportionately more funding from the federal government that states with apparently oppressive tax codes?" This could possibly be a gamechanger for some states.

It also brings to light American's perception of state and local taxes around the U.S.

To determine the rankings, analysts compared 50 states with three key factors: federal funding as a share of state revenue, share of federal jobs and return on taxes paid to the federal government.

Here are the key findings for Mississippi:

  • Ranked eighth on return on taxes paid to federal government
  • Ranked first in federal funding as a share of state revenue
  • Ranked 16th in share of federal jobs

Other findings

The Magnolia State is ranked the highest in number of grants received by the federal government, with Alaska, West Virginia and New Mexico trailing behind. Also, Mississippi is one of the states with the highest amount of federal contracts received and the state with the lowest gross domestic product per capita in 2017.

The top five states that were the least federally dependent in this study include California, Illinois, New Jersey, Minnesota and Delaware.

To see the full WalletHub report, click here.