Wednesday, August 6, 2014

How lack of democracy robs our largest states, and the Tax Foundation has it wrong

What are the siz largest states by population?
California, Texas, Florida, Illinois, Pennsylvania, and Ohio.
California, Texas and New York lose the most money in Federal transfers.  Florida is the retirement state and gains on entitlements.
So Let's look at income transfers, according to the Tax Foundation.

What we see is Pennsylvania and Ohio breaking even. Otherwise, excepting Florida, the massive transfer of wealth is from Texas, New York and California.

What causes these states to engage in this reckless activity?

Simple lack of democracy in DC, and the state legislatures are operating in the dark. These legislatures never know what crazy schemes come out of DC until its too late.

Here is what the tax foundation says:

The much more likely factor driving the persistent imbalance between federal taxing and spending isn't the relative ability of lawmakers to "bring home the bacon," but is the fact that higher income states bear a larger fraction of the federal tax burden—an imbalance that is sharply amplified by the progressive structure of the federal income tax. 
That is not correct since California, Texas and New York are at the bottom ten in gini coefficient, the number of poor people relative to population. If progressive taxation were the cause, then these states would tax more progressively and suffer less at the hands of DC. But they cannot, they do not have the Senate votes.