In 2016, Californians paid $422.7 billion in taxes to the Internal Revenue Service. This amount broadly includes individual income taxes, unemployment insurance taxes, business taxes, as well as estate, gift, and excise taxes. This information can be downloaded and reviewed from the IRS Data Book for 2016.
California as usual paid more federal taxes in 2016 than any other state in the Union. It also received more dollars in federal spending than any other state. Both of these points make sense considering California is the most populous state in the Union. Although California ranks first in the sheer amount of federal tax dollars received, on a per capita basis California ranks 36/60 (including U.S. territories) — at $7,373 federal dollars per Californian.
In terms of how much the federal government spent in California in 2016 – a combination of Social Security payments, payments for veterans, farms, sole proprietors, federal contractors, small business loans, insurance, assistance to state and local governments, medicaid, medicare, local school districts, public and private universities, research, student aid, social services, and other types of federal spending representing just 8% of the total — California received $289.4 billion, according to data available at the new beta version of USAspending.gov.
That represents a loss of $133.3 billion dollars. In other words, California paid over $133 billion more to the federal government than it received in 2016. In the interest of fairness, the $289.4 billion in spending in California does not include salaries and benefits of federal employees located in California, nor does it include other costs associated with running the federal government nationwide — a figure that represents 21% of the entire $3.85 trillion federal budget, or approximately $808.5 billion across all fifty states and U.S. territories.
According to Governing Magazine, “the nation’s leading media platform covering politics, policy and management for state and local government leaders,” California had 141,158 federal employees as of December, 2016, excluding postal service workers, and an additional 190,160 active duty and reserve U.S. military personnel. Perhaps the $133.3 billion in taxes California lost last year can be reconciled by accounting for federal salaries? Perhaps if the average federal salary were $402,719 a year. According to the U.S. Bureau of Economic Analysis, though, the average federal salary in 2016 was much less — $80,384 a year (navigate to Table 6.6D here if the link doesn’t work)
If we apply the average federal salary to the federal employee population in California of 141,158, that amounts to an additional $11.3 billion in federal spending in California. Meanwhile, according to the Defense Spending by State report by the Office of Economic Adjustment, the total payroll for defense personnel in California was $14.6 billion. You can download their snazzy state-by-state defense spending analysis PDF here. Combined, $11.3 billion for federal civilian workers and $14.6 for defense personnel, we can estimate federal salaries in California to be about $26 billion — let’s just say $30 billion a year.
The bottom line is California paid about $103 billion more in federal taxes than we received in federal funding in 2016 alone, and as a reminder, that federal funding includes Social Security payments, payments for veterans, farmers, sole proprietors, federal contractors, small business loans, insurance, assistance to state and local governments, medicaid, medicare, money for local school districts, funding for public and private universities, research grants, student aid programs like the Pell Grant, social services, and… salaries for federal civilian workers and defense personnel.
What does that mean? It means with all the taxes you currently pay to California and all the taxes you currently pay to the IRS, we would have enough to continue paying for every state government service, agency, job, program, grant, and salary, and start paying for everything the federal government pays for in California, and still have an extra $100 billion, for say, establishing a universal healthcare program, creating a debt-free college program, and building a military — or all three of them because the estimated cost of those three budget items is, ironically, about $100 billion annually.