President Trump has recently suggested that he may start defunding California’s federal subsidies after the shutdown on immigration made national news. In an interview with Fox News host Bill O’Reilly, Trump stated that California is getting a tremendous amount of money from the government. But, he neglected to mention one important detail.
Apparently, California shells out a lot of money to the rest of the nation in return. If you look at the numbers more closely, including government services provided every year and taxes paid, it is clear that California plays a valuable role in the nation’s economy.
One of the most common ways to measure California’s economic security is by analyzing its gross domestic product. This number is a snapshot of the dollar value for every good and service the state produces, and the state’s GDP categorizes it as an international powerhouse.
California’s economy is estimated to be worth about $2.4 trillion, which would make it the sixth largest economy in the world if it were categorized as its own nation. It ranks just below the United Kingdom, and there’s a chance that the effects of the “Brexit” vote in the UK could cause California to take its place in the rankings.
Federal researchers who estimate the GDP for each of the 50 states even rank California number one. Although some people feel that Texas could be a close second, considering that it seems more business-friendly, California leads by a landslide.
The gap between the GDP in other states versus California is even more appalling. Florida and Pennsylvania only have combined goods and services that are less than two-thirds of California’s.
Even more surprising is the fact that California leads the nation in terms of the size of its farming industry. The Legislative Analyst’s Office released data that shows the state produced more than $45 billion from farming in 2015. This surpasses Iowa, Texas, and Nebraska by a lot. This data also suggests that milk and almonds are the state’s two most valuable products.
But the debate over Trump’s comments has mainly focused on how much residents of California pay in taxes compared to how much they receive from the government for federal services. These services include anything from social security checks to university grants. The Pew Charitable Trusts conducted a study attempting to see how much federal spending was allocated per person, but according to this data, California receives much less than other states.
Researchers say that the reason for this is because many federal dollars are spent on retirement and health care for elders, and the population in California is predominantly those who are 65 and younger.
According to data compiled by The Legislative Analyst’s Office, it is estimated that the government spends $367.8 billion each year on the state of California. Data compiled by the Internal Revenue Service indicates that residents of the state pay about $365 billion in taxes each year. Not to mention, this average could begin to increase, as the state’s 2015 tax payments were substantially higher than previous years.
All this data suggests that California continues to fall short when comparing annual payments from the federal government and annual taxes paid.