Economy
Donor States vs. Recipient States: Where Does Your Federal Tax Dollar Go?
Some states send Washington more money than they receive, while others receive considerably more federal spending. Here’s what “donor state” really means—and why the numbers don’t necessarily measure government dependency.
Every year, Americans send trillions of dollars to Washington through income taxes, payroll taxes, corporate taxes and other federal revenues. The federal government then sends trillions back across the country through Social Security, Medicare, Medicaid, military spending, federal salaries, contracts, grants, infrastructure projects and dozens of other programs.
But the money doesn’t necessarily return to the states in the same proportions in which it was collected.
That’s where the terms “donor state” and “recipient state” come in.
What Is a Donor State?
Simply put, a donor state sends more money to the federal government than it receives back in federal spending.
Imagine taxpayers and businesses in a state contribute $100 billion to the federal government during a year. If federal spending within that state totals only $80 billion, the state has effectively contributed $20 billion more to the federal government than it received.
A recipient state experiences the opposite: federal expenditures within the state exceed the amount collected there in federal revenue.
These aren’t official federal government classifications, however. They’re terms commonly used by researchers analyzing the flow of money between individual states and Washington.
Only Three Donor States in 2023?
According to an August 2025 analysis from the Rockefeller Institute of Government using preliminary federal fiscal year 2023 data, only three states had negative balances—meaning they contributed more federal revenue than they received in federal expenditures.
Those states were:
New Jersey: approximately $18.9 billion more contributed than received.
Massachusetts: approximately $6.8 billion more contributed than received.
Washington: approximately $54 million more contributed than received.
At first glance, that might suggest nearly every other state depends financially on those three states.
The reality is considerably more complicated.
COVID Changed the Numbers
Historically, several wealthy states—including California and New York—have frequently appeared on the donor side of the equation.
The enormous federal response to the COVID-19 pandemic disrupted that pattern.
Trillions of dollars in extraordinary federal spending flowed into states through stimulus payments, business assistance, unemployment programs, healthcare funding, state and local government assistance and other programs.
Even after the emergency phase of the pandemic ended, some of those expenditures continued influencing federal balance-of-payments calculations.
That’s one reason examining a single year can produce a misleading picture.
California: Recipient Today, Historical Donor
California provides perhaps the best example.
In fiscal year 2023, California technically received slightly more federal spending than it contributed—approximately $342 more per person.
But look at the longer-term numbers and the picture changes.
Using a nine-year average that excludes COVID-related spending, Rockefeller Institute researchers calculated California’s average balance at approximately negative $29 billion.
In other words, over a more typical period, California has historically contributed substantially more to the federal government than it received.
Its enormous economy, high incomes and large number of taxpayers generate tremendous amounts of federal revenue.
New York Tells a Similar Story
New York has also historically ranked among America’s major donor states.
Yet in 2023, New York had a positive federal balance of approximately $13.3 billion, receiving roughly $1.04 in federal expenditures for every $1 it contributed.
Researchers attributed much of the change from New York’s historical pattern to lingering pandemic-era federal expenditures.
As those programs disappear from the calculations, New York could return to its traditional position as a donor state.
Arizona Is a Net Recipient
Arizona presents a different picture.
Over the Rockefeller Institute’s nine-year analysis, Arizona averaged a positive federal balance of approximately $44.5 billion.
Even after excluding COVID-related spending, Arizona’s average remained positive at roughly $35.3 billion.
That means federal expenditures flowing into Arizona have substantially exceeded federal revenue collected from the state.
But that doesn’t mean Arizona simply receives tens of billions of dollars in “welfare.”
Federal spending includes far more than public assistance.
Arizona hosts military installations, federal lands and agencies, defense and aerospace operations, veterans programs and a significant retiree population receiving Social Security and Medicare.
All of those expenditures count toward the state’s federal balance.
Texas Receives More Than It Sends
Texas also had a substantial positive balance in 2023.
Federal expenditures exceeded revenues collected from Texas by approximately $80 billion, making it one of the country’s largest net recipients in total dollars that year.
Again, the number needs context.
Texas is home to major military installations, NASA operations, defense contractors, federal infrastructure projects and millions of Social Security and Medicare recipients.
Those federal dollars all count as money flowing back into the state.
The Surprising Leader: Virginia
If recipient-state status simply meant dependency on federal welfare programs, Virginia would seem like an unlikely candidate to lead the country.
Yet Virginia recorded the nation’s largest positive federal balance in 2023 at approximately $145.4 billion.
Why?
Location.
Virginia sits next to Washington, D.C., and contains an enormous concentration of federal employees, military installations, government contractors and defense spending.
Neighboring Maryland ranked second with a positive balance of approximately $81.1 billion.
The numbers illustrate why federal balance-of-payments statistics should not automatically be interpreted as measurements of welfare dependency.
A recipient state isn’t necessarily a “welfare state.” Federal expenditures include Social Security, Medicare, military installations, defense contracts, federal salaries, research, infrastructure, grants and other programs.
Where Does the Federal Money Actually Go?
Federal expenditures flowing into a state can include:
- Social Security
- Medicare and Medicaid
- Military bases and personnel
- Defense contracts
- Federal employee salaries
- Highway and transit funding
- Scientific and university research
- Agricultural programs
- Veterans benefits
- Disaster assistance
- Federal grants
- Infrastructure projects
- Federal agency operations
A state containing a large military installation, federal laboratory or government agency can therefore receive billions of federal dollars without that money having anything to do with traditional public assistance programs.
Why Wealthier States Often Become Donors
Federal income taxes are progressive.
People with higher incomes generally pay a larger percentage of their income in federal income taxes.
States containing large concentrations of high-income households and highly profitable companies can consequently generate enormous amounts of federal revenue.
That helps explain why states such as California, New York, New Jersey and Massachusetts have historically appeared frequently among net contributors.
The federal government doesn’t earmark the taxes collected in California exclusively for California.
The money enters the national treasury and helps finance programs throughout the United States.
In that sense, federal taxation intentionally redistributes resources geographically as well as economically.
So Are Donor States “Subsidizing” Recipient States?
In a broad accounting sense, yes.
Federal revenue collected disproportionately from some states helps finance federal expenditures occurring elsewhere.
But describing the relationship simply as one state “paying for” another leaves out important context.
Federal spending follows national priorities rather than state borders.
A Navy base in Virginia protects the entire country. NASA facilities in Texas conduct missions funded by taxpayers nationwide. Social Security benefits paid to a retiree in Arizona may reflect payroll taxes that person paid while working decades earlier in California, Illinois or New York.
Americans and businesses also move between states throughout their lives.
The federal system was never designed to ensure that every dollar collected within a state’s borders would eventually return to that same state.
The Bigger Picture
The donor-state debate is often used as political ammunition, particularly when politicians argue about which parts of the country are supporting others.
The numbers are real, but they require context.
A state can move from donor to recipient status because of a recession, natural disaster, military spending, demographic changes, infrastructure investments or extraordinary events such as the COVID-19 pandemic.
That’s why examining several years of data generally tells us more than looking at a single year.
Ultimately, the donor-versus-recipient calculation reveals something fundamental about the United States:
Federal taxes don’t remain where they’re collected.
They become part of a national pool used to fund programs, obligations and investments across all 50 states.
And depending on where you live, your state may be putting more into that pool—or taking more out—at any particular moment.
Related External Links
- Rockefeller Institute of Government – 2025 Balance of Payments Report
- USAspending.gov – Explore Federal Government Spending
- USAspending.gov – Federal Spending Guide
- IRS – Individual Income Tax Data by State
- IRS – Federal Taxes Collected by State
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Last Updated on September 17, 2026 by Daily News Staff
HOLLYWOOD, Calif. — Paramount’s century-long connection to Hollywood could be facing one of its biggest challenges yet, as the entertainment giant reportedly prepares for the possibility of moving major operations out of California amid an escalating legal battle over its proposed acquisition of Warner Bros. Discovery.
Paramount has informed the offices of Los Angeles Mayor Karen Bass and California Attorney General Rob Bonta that it is prepared to formally announce plans to leave California, according to reporting Wednesday from TheWrap. Paramount has not formally announced a relocation, and a company spokesperson declined to comment to the publication.
The potential move centers on Paramount Skydance’s proposed approximately $110 billion acquisition of Warner Bros. Discovery, a deal being challenged on antitrust grounds by California and a coalition of 11 other states, along with a separate challenge from the Writers Guild of America. California Attorney General Rob Bonta argues that combining the two entertainment companies could reduce competition, potentially leading to higher prices and fewer choices for consumers.
A court agreement currently prevents Paramount and Warner Bros. Discovery from completing the merger until June 1, 2027, or until after a court decision on the states’ claims, whichever comes first. The antitrust case is scheduled for trial in March 2027.
Paramount’s Hollywood Future
At the center of the controversy is Paramount’s historic studio complex at 5555 Melrose Avenue in Hollywood, one of the entertainment industry’s most recognizable properties.
The Los Angeles Times reported that Paramount CEO David Ellison has told associates that he would prefer to remain in Los Angeles. However, Paramount’s board has reportedly approved a contingency plan that could move the company’s headquarters out of Hollywood, and Ellison has indicated that the company is prepared to sell its historic studio properties and relocate operations if the merger remains stalled.
Tennessee, Texas and Georgia have emerged in reports as potential destinations should Paramount ultimately decide to relocate.
The financial pressure is significant. Beginning October 1, Paramount faces a roughly $7 million-per-day additional payment obligation tied to delays in completing the Warner Bros. Discovery transaction. Paramount has asked the federal court to require the states and the Writers Guild of America to post a $1.88 billion bond to cover potential costs associated with the delay.
What’s at Stake for Los Angeles?
A Paramount departure could extend far beyond the loss of a famous Hollywood address.
An economic analysis cited by TheWrap estimates that a large-scale Paramount departure could put as many as 57,980 full-time jobs, $21.2 billion in annual economic output and approximately $1.17 billion in state and local tax revenue at risk. Those figures represent an economic-impact scenario rather than a prediction that all of those losses would necessarily occur.
There are competing concerns about the merger itself. Los Angeles County analysis has estimated that completing the Paramount-Warner Bros. combination could also eliminate thousands of entertainment and related jobs because of consolidation. Opponents of the merger, including entertainment unions, have raised concerns about reduced competition and employment, while supporters argue that reaching a settlement could help prevent Paramount from moving operations out of California.
Mayor Bass has said she remains focused on protecting Los Angeles entertainment jobs and keeping Hollywood’s entertainment industry centered in the city. Bonta’s office, meanwhile, has maintained that California will continue enforcing its antitrust laws while remaining open to good-faith discussions. There is still an opportunity for the dispute to be resolved before Paramount makes a final decision about its California operations. Paramount Skydance and representatives for California Attorney General Rob Bonta are scheduled to participate in court-ordered settlement talks on October 14 and 15. The discussions could potentially resolve the antitrust dispute and clear a path for Paramount’s proposed Warner Bros. Discovery acquisition. For now, Paramount has made no official announcement that it is leaving California. The company declined to comment on reports Wednesday that it was preparing to announce a departure. That leaves the future of Paramount’s Hollywood operations — including its historic Melrose Avenue studio — uncertain as the legal and financial pressure surrounding the merger continues to build. Settlement Talks Scheduled
For now, the gates at Paramount remain firmly planted on Melrose Avenue.
Settlement Talks Scheduled
There is still an opportunity for the dispute to be resolved before Paramount makes a final decision about its California operations.
Paramount Skydance and representatives for California Attorney General Rob Bonta are scheduled to participate in court-ordered settlement talks on October 14 and 15. The discussions could potentially resolve the antitrust dispute and clear a path for Paramount’s proposed Warner Bros. Discovery acquisition.
For now, Paramount has made no official announcement that it is leaving California. The company declined to comment on reports Wednesday that it was preparing to announce a departure.
That leaves the future of Paramount’s Hollywood operations — including its historic Melrose Avenue studio — uncertain as the legal and financial pressure surrounding the merger continues to build.uilding around the Warner Bros. Discovery deal, the question of whether one of Hollywood’s most historic studios will continue calling California home has moved from speculation to a potentially consequential decision for Los Angeles and its entertainment industry.
STM Daily News will continue monitoring the Paramount-Warner Bros. Discovery dispute and what it could mean for Hollywood, entertainment workers and the future of film and television production in California.
Source and Related Reading
- California Attorney General — Agreement Halting Paramount/Warner Bros. Merger — Primary source explaining the states’ antitrust challenge and agreement delaying completion of the merger.
- Los Angeles Times — Paramount and Bonta Ordered Into Settlement Talks — Reports the October 14–15 settlement meetings and current state of the dispute.
- Los Angeles Times — Paramount’s Possible Hollywood Exit — Detailed reporting on the relocation contingency, potential destinations and implications for Los Angeles.
- Reuters — DOJ Backs Bond Demand in Paramount-Warner Fight — Covers the $1.88 billion bond dispute, $7 million daily fee and March trial.
- TheWrap — Paramount Preps California Exit — Reports the latest developments surrounding Paramount’s potential departure.
(Feature Impact) Every year, approximately 200,000 service men and women transition from military life to corporate America. Finding the right civilian career is a transition, but it’s an opportunity to leverage military leadership and mission-driven talent.
Traditional hiring processes often focus on conventional resumes, but forward-thinking organizations recognize military experience as a competitive advantage in today’s workforce. The resilience, integrity and adaptability of America’s veterans and military families make them uniquely positioned to drive growth and innovation in their communities.
“Veterans bring unmatched discipline, adaptability and a results-driven mindset that directly translates to high-impact corporate careers,” said Drew Matheson, senior director at Capital One’s Commercial Bank and retired U.S. Army infantry officer. “While military experience doesn’t always fit perfectly on a traditional paper resume, employers like Capital One who know how to decode these unique leadership skills are able to unlock an incredible pipeline of proven performers.”
To help transitioning service members successfully navigate this career pivot, military community leaders at Capital One offer these five essential tips for service members entering the civilian workforce:
Start With What You’ve Already Earned
Opportunity starts with preparation. Beyond the well-known Post-9/11 GI Bill, which can cover tuition, housing and books, transitioning service members can look into vocational rehab or the SkillBridge program, which allows them to do civilian internships during the last 180 days of service. Many employers also offer internal tuition reimbursement programs. Taking the time to proactively map out these benefits ensures you aren’t leaving valuable opportunities or money on the table.
Find Employers with Veteran Support Structures
With almost half of veterans leaving their first post-military job within a year, according to research published by the Institute for Veterans and Military Families and VetAdvisor, finding the right culture and community is key to a successful transition. Look for employers with active veteran networks and dedicated mentorship.
For example, Capital One’s Salute Business Resource Group serves as a thriving internal community of more than 6,000 members, offering peer support, year-round professional development and mentorship for veterans, reservists and military spouses. Additionally, partner organizations like Hiring Our Heroes provide career workshops, fellowships and job fairs to ensure you’re employment-ready from day one.
Lean Into and Translate Your Soft Skills
Veterans bring a distinct competitive advantage to the applicant pool. You should confidently lean into the cross-functional “soft skills” learned in the line of duty such as risk management, crisis resolution and building trust under high-pressure scenarios.
The trick is translating these capabilities out of military jargon on your resume. Swap military terms like “NCOIC” for “Operations Manager” or “commanded” for “directed.” To make this easier, look for military-friendly employers that employ dedicated military recruiters who specialize in decoding military resumes to align skills with the right roles.
Prioritize Support for the Whole Family
Military service is a family commitment, and the transition out of uniform affects everyone. Military spouses often face unique career hurdles, including frequent relocations and employment gaps. When evaluating employers, look for companies that offer holistic benefits and flexible structures.
For example, Capital One, recognized by “U.S. Veterans Magazine” as a Top Veteran Employer and Top Military Spouse Employer, actively supports military spouses and families through dedicated spouse hiring initiatives and internal support mechanisms. Furthermore, look for organizations that support continued military training and active-duty leave, ensuring military associates never have to choose between their service and their careers.
Build Your Civilian Network Early
In the military, your network is built in. In the civilian world, you have to cultivate it. Long before your terminal leave begins, connect with veterans who work at companies you admire. Reach out for brief, 15-minute informational interviews to learn about their transition journeys rather than simply asking for a job. With more than 70% of civilian jobs filled through networking, according to estimates from Career Horizons, making organic connections early is a powerful tool for getting your foot in the door.
To find additional resources and learn more about how to support the hiring of veterans and military spouses, visit CapitalOneCareers.com/Military.
Photo courtesy of Shutterstock
SOURCE:
Economy
U.S. Consumer Confidence Slips as Americans Grow More Cautious About the Future
U.S. consumer confidence edged lower in August as Americans became more pessimistic about jobs, income and business conditions over the next six months, despite improved views of the current economy.
NEW YORK — U.S. consumer confidence edged lower in August as Americans expressed greater concern about future business conditions, jobs and household income, even as their assessment of the current economy improved.
The Conference Board reported that its Consumer Confidence Index fell 0.8 points to 89.4 in August, down from 90.2 in July.
The relatively small decline, however, masks a widening gap between how consumers view conditions today and what they expect in the months ahead.
The Present Situation Index, which measures consumers’ assessment of current business and labor market conditions, climbed 6.8 points to 121.2, reversing three consecutive months of declines.
Meanwhile, the Expectations Index, which measures the short-term outlook for income, business and employment conditions, dropped 5.8 points to 68.2.
“Consumer confidence moderated slightly in August for a second consecutive month,” Dana M. Peterson, chief economist at The Conference Board, said in the organization’s Aug. 25 release.
Jobs Look Better Today — But Consumers Worry About Tomorrow
Americans’ perceptions of the current labor market improved considerably during August. About 27% said jobs were plentiful, up from 24.4% in July, while 19.5% said jobs were hard to get, down from 21.7%.
The outlook for the next six months was considerably weaker.
Only 14.6% expected more jobs to become available, compared with 16.4% in July. At the same time, 26.1% expected fewer jobs.
Consumers were also less optimistic about their incomes. About 17.6% expected their income to increase, down from 19.5% in July, while 13.8% expected their income to decline.
Prices Remain on Consumers’ Minds
Inflation continues to influence how Americans feel about the economy. According to The Conference Board, consumers’ written responses frequently mentioned prices, oil and gasoline, food and groceries, trade, jobs, and war or conflict.
Average and median expectations for inflation over the next 12 months also increased slightly.
Interest rates remain another concern. More than six in 10 consumers — 61.3% — expected interest rates to rise over the next year, although that was slightly lower than the 62% recorded in July.
Consumers Are Still Planning to Spend
The softer outlook hasn’t eliminated Americans’ willingness to make purchases.
Auto-buying expectations remained strong on a six-month moving-average basis, while homebuying expectations declined slightly in August but remained on a longer-term upward trend after hitting decade lows in early 2024.
Restaurants, bars and takeout; utilities; and streaming, internet and mobile services ranked among consumers’ leading planned service expenses.
Consumers were less enthusiastic about discretionary activities including movies, personal-travel hotels, airfare, amusement parks, museums and historical sites.
Why It Matters
The August numbers paint a mixed picture of the American consumer.
People are seeing some improvement in the economy they are experiencing today, particularly in the labor market. But their expectations for the next six months are becoming noticeably more cautious.
That divide matters because consumer spending represents a major part of U.S. economic activity. If concerns about employment, inflation and household income begin translating into reduced spending, weakening confidence could eventually become more significant for the broader economy.
For now, the August survey suggests Americans haven’t stopped spending — but they’re increasingly keeping an eye on what may be coming next.
The preliminary August Consumer Confidence Survey was conducted online for The Conference Board by Toluna. The survey period was Aug. 3–16, 2026.
Source: The Conference Board, August 2026 Consumer Confidence Survey®, released Aug. 25, 2026.
STM Daily News Economy News Brief
Sources
- The Conference Board — U.S. Consumer Confidence, August 2026 — Primary source for the August Consumer Confidence Index, Present Situation Index and Expectations Index.
- The Conference Board — Consumer Confidence Survey & Data — Consumer confidence survey information, methodology and release schedule.
Related Economic Data
- Bureau of Economic Analysis — Consumer Spending — Official U.S. data tracking personal consumption expenditures. Consumer spending increased 0.2% in July 2026.
- BEA — Personal Income and Outlays, July 2026 — Tracks household income, disposable income, consumer spending and saving.
- Bureau of Labor Statistics — Consumer Price Index — Official inflation data. The July 2026 CPI was up 3.4% from a year earlier; August CPI is scheduled for release September 11.
- Federal Reserve — Consumer Credit — Federal Reserve data covering revolving and nonrevolving consumer credit.
