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Small Government = High Poverty in U.S. States

David Callahan

For decades we've been hearing that government spending helps to cause poverty by keeping people dependent and by depressing economic growth.

This is not only nonsense, but new Census data shows that the exact opposite is true: Poverty tends to be higher in those states with small government.

Consider the comparison below. The first number is the percentage of people in poverty and the second number is the state and local tax burden per capita rank, as estimated by the Tax Foundation (the higher the number, the lower the tax burden, with 50 the lowest.)

Highest State Poverty Rates vs. Tax Burden Rating

22.9%    50   Mississippi   

19.9%    40    Arizona

19.0%    45    New Mexico

18.5%    32    Georgia

18.0%    43    Louisiana

17.9%    39    Texas

17.2%    35    Arkansas

17.2%    28    North Carolina

In general, of course, state and local tax burdens parallel government spending; states with lower taxes spend less on government than states with higher taxes.

Many variables influence state poverty rates, so this kind of comparison only goes so far. But there is a logical reason for the correlation you're seeing here, which is that poverty is greater in places with weaker anti-poverty efforts and lower public investments in schools, infrastructure, and the like.