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Foster Introduces Bill To Address Illinois’ “Payer State” Problem

Feb 5, 2015
Press Release

Washington, DC – To highlight Illinois’ “Payer State” problem, today Congressman Bill Foster (D-IL) and Scott Garrett (R-NJ) introduced the Payer State Transparency Act of 2015. In a typical year, $20 billion leaves Illinois because we are a “Payer State” that pays $1.36 in federal taxes for every dollar of federal spending returned to the state. In fact, according to figures compiled by the Pew Charitable Trust, Illinois receives the third smallest amount of federal spending per-capita in the country.

The Payer State Transparency Act of 2015 would help shed light on this problem by collecting accurate, up to date data on the scope of the problem with a yearly “Payer State Report” that shows the effect of legislation on the state-by-state balance of payments.

Text of the legislation is available here.

“As a businessman who co-founded a manufacturing company, I understand the financial drag that federal Payer State policies put on companies that are committed to keeping good jobs here,” said Foster. “As the Representative of Illinois’ 11th District in the U.S. Congress, I recognize the burden it places on middle-class families, and the tragic underinvestment in physical and human capital driven by the fact that Illinois is a Payer State.  I’ve introduced the Payer State Transparency Act to develop a clear picture of how big this problem really is and to find ways to make sure Illinois taxpayers are getting their fair share.”

While the entire country is governed by the same federal tax code, the per-capita tax burden and the corporate tax burden vary substantially between states.  Furthermore, many states get much more back in federal spending than others. This transfer of wealth from the “Payer States” to the “Taker States” inevitably shows up as higher state taxes, higher government debt, and underinvestment in education, infrastructure and health care in the “Payer States.” 

The Payer State Transparency Act would require the Office of Management and Budget, in conjunction with the Council of Economic Advisors and the Treasury Department, to produce annual assessments of net economic effect on individual states of all federal spending programs, and compare these figures against a model of state tax burdens developed by the Bureau of Economic Analysis.