Blue State, Red Face: Guess Who Benefits More From Your

Quote:

Blue State, Red Face: Guess Who Benefits More From Your Taxes?

http://www.slate.com/blogs/the_reckoning/2012...taxes.html



Picking up on yesterday's theme, the fiscal cliff, let's look at the wider context to the argument between left and right over taxes and spending cuts.

There are serious economists who study the difference between what our states pay in taxes and how much they get in return from the U.S. government. These people generally don’t draw political, let along moral, judgments from these numbers.

I’m under no such constraint. The numbers, for decades now, have been quite clear: With some exceptions, what we regard as red states are sent a whole lot more of your hard-earned tax dollars than the traditional blue states.

In effect, supposedly indolent, “tax and spend” liberals actually subsidize the individualistic, pure, and hard-working lifestyle of our conservative countrymen.

Don’t believe me? Well, there’s plenty of room for quibbling about what constitutes a tax payment vs. a federal benefit. Let’s hash that out below in the comments section.

But for simplicity's sake (and to account for the fact that it’s hard to label some states as purely red or blue, I’ve taken the most recent Electoral College Map from RealClearPolitics—which shows how these states would likely vote if the presidential election were today—and cross-referenced it with numbers from one of those places peopled by serious economists: the nonpartisan Tax Foundation.*



The results will stun many people, though not me: I’ve been telling my Tea Party relatives this for years. Here’s a list of the top 10 states that got the most back in terms of federal benefits, followed by the bottom 10. I’ve added the reasons why, when they’re obvious, in the space to the right.

To save space below, “pension benefits” include both Medicare and Social Security; “anti-poverty aid” includes Head Start, Low Income Home Energy Assistance, Food Stamp and nutrition programs for Women, Infants and Children (WIC), and several school-lunch-style benefits.

Top Ten (Source: Tax Foundation):
1. New Mexico Indian reservations, military bases, federal research labs, farm subsidies, retirement programs
2. Mississippi Farm subsidies, military spending, nutrition and anti-poverty aid, retirement programs.
3. Alaska Per capita No 1 recipient of federal benefits; infrastructure projects, DOT and pork projects.
4. Louisiana Disaster relief, farm subsidies, anti-poverty and nutrition aid, military spending.
5. W. Virginia Farm subsidies, anti-poverty and nutrition aid.
6. N. Dakota Farm subsidies, energy subsidies, retirement and anti-poverty programs, Indian reservations.
7. Alabama Retirement programs, anti-poverty and nutrition aid, federal space/military spending, farm subsidies.
8. S. Dakota Retirement programs, nutrition aid, farm subsidies, military spending, Indian reservations.
9. Virginia Civil service pensions, military spending, veterans benefits, retirement, anti-poverty aid.
10. Kentucky Retirement programs, nutritional and anti-poverty aid, farm subsidies.

Now consider the bottom 10, i.e., the ones that give more to the federal government in taxes than they get in return. From 1 to 10, they are:

New Jersey, Nevada, Connecticut, New Hampshire, Minnesota, Illinois, Delaware, California, New York, Colorado.
Anything strange about that list? Yes, they are all blue states (or the deepest of purple).

Adding to this fallacy are the assumptions surrounding Mitt Romney’s now infamous comments about the indolent “47 percent” of Americans who regard themselves as victims and therefore pay no taxes.

As the American Conservative magazine (no less) pointed out recently, nine of those 10 states are in the red-as-ruby Old Confederacy.*



Put another way, again by the American Conservative, “On the other hand, eight of the ten states with the highest non-payment rates are solidly Republican. The exceptions are New Mexico and Florida.”

Is your mouth agape?

Now, one more cross-reference: these facts compared with the know-nothing rhetoric of the Tea Party. There are only two ways to parse that result: one is ignorance—which we should be willing to forgive in anyone as long as they revise their views when faced with reality.

And the second? Selfish hypocrisy. How else can you explain the fact that the denizens of the most welfare dependent states in the country—dare we say, those who enjoy the most benefits from socialism—profess to abhor welfare?

This is a far cry from what most people think. My sense is that, if you asked the average American, they would assume that states benefiting most from federal spending are exactly the opposite—you know, those populated with Ronald Reagan’s “welfare queens” and lazy unionized auto workers.

I’ll be the first to admit this isn’t a black-and-white exercise. Plenty of questions need to be settled before clear judgments can be made.

For instance, does an Army base and the federal money that goes into keeping it running and paying its troops count as a benefit? (It does in my book.)

What about a federal prison? (Yeah, jobs and the tax revenues they generate should count there, too.) A private university that is showered with federal research dollars? (Again, yes, those funds count, too.)

But those questions get harder.

Agricultural subsidies? How do we count them—and do we subtract the tax revenues generated by the jobs the farm creates or the export earnings it provides?

And what about defense contractors? Connecticut, Washington state, and California are chock full of weapons merchants. They provide jobs, export income, and many other benefits. Should we count as a federal inflow to those states the money spent, say, on Sikorsky aircraft contracts in Connecticut? And how do we factor in the taxes those companies paid (assuming, unlike nearby General Electric, they actually paid taxes)?

And I admit, maybe we should dock Connecticut and New Jersey for the remaining outstanding balance of the TARP program?

All these accounting issues are over my head, I’ll freely admit. But I trust the figures above, compiled by the rock solid economists at the Tax Foundation, a nonpartisan research group—as a good indicator of the general state of our fiscal reality. When the reality has veered so far from the prevailing political bullshit, it’s time for someone to point it out.

So spare me all that red state angst about the federal deficits and national debt. When you stop spending New Jersey’s money, Tex, and produce a plan to replace it with your own revenue stream, then you've earned an opinion in the matter.