Do the 50 US States have to pay taxes to the Federal Government?

Question

My Colleagues at work claim that US States pay taxes to the Federal Government but that this amount is less than they get back from the Federal Government.

Answer 1

No. States and local governments are exempt from federal taxation (as long as the proceeds of income come from governmental functions and purposes) under Section 103 of the IRS Code of 1986, as amended.

Answer 2

No. In fact, the federal government taxes people far more than necessary, so it can turn around and give money to the states to get the states to do what it wants.

For example, back in 73 during the "gas crisis" the federal government wanted to lower speed limits to 55 mph on all highways. Since setting speed limits is the function of states, the federal government "blackmailed" the states into doing it, by threatening to withhold highway funds that the states had become dependent upon.

Another example, in western states such as Nevada, where MOST of the state is owned by the federal government, the feds pay the state to compensate for the tax money the state does not get for property taxes.

Lastly, the feds pass a law that requires the states to do something but does not give them any money to do it. (This is called an "unfunded mandate.") The most recent example is the REAL ID program. It requires the states to tighten up on requirements for drivers' licenses, which will take more time and money to do, yet the feds did not give the states any extra money to do it so the states have to pay for the program. (Not to worry, as with Background checks for guns, unfunded mandates are unconstitutional so as soon as the states file suit, it will either be overturned by the courts OR the feds will have to cough up the money to do it.)

Answer 3

No, the states do not pay taxes to the Federal government.

Answer 4

Depends on how you define your words.

The answer is NO

States don't pay taxes, people pay taxes.

The Government Fed, State, Local, School, etc etc etc take a chunk of your money; keep a bunch for their own administrative needs and then redistribute it to whatever cause of the moment they consider important for their re-election campaign.

As to whether the State has to fork over some money to the Feds for something and then get some money back from the Feds for something is all just a shell game to keep you from seeing the Big Picture.

You are a slave to the government. Try not paying your taxes and see what happens.

Answer 5

No, it's actually illegal for the levels of government to tax each other. This is why government bonds are exempt from taxation at alternate levels (municipal bonds are exempt from fed taxes, fed bonds are exempt from state taxes, etc.)

The federal government gets around this by FUNDING state and local issues, such as education. The federal government can regulate states by regulating the funding they offer.

Answer 6

no unless your in your own "state" of mind then yes. but if you mean all 50 state citizen pay taxes to IRS then yes.

Answer 7

yes!