We hear a lot about the “donor” states that contribute more to the Federal government in taxes than they receive. New York is one, so they claim. But there are a host of explanations of how and why. Consider a business person in Iowa. Eventually this person travels to New York for meetings or a conference. So, maybe $3500 is spent on the trip. The $3500 becomes a tax deduction back home, and taxes will not be paid on that money from Iowa. However, the $3500 is spent in NY on hotels, meeting fees, travel, and restaurants. This income goes to NY residents in one form or another. And this money is Federally taxed - but to NY residents. Thus, the Fed govt gets taxes from money earned in Iowa but spent in NY. Now multiply by the millions of visitors each year from other states to NY. As well, some of that $3500 is paid to the State of New York in state income tax. New York politicians parade their high Federal tax contributions, never mentioning this slight of hand.
Random thoughts and used ideas