Thursday, October 15, 2020

Who wins in my revenue sharing plan?

 States with four or five house districts. They have maximum integration of the total take. In California is appears as a distortionary tax, a transfer from House districts to state capital.  It is the House rep doing the work. It is less than five percent of the state budget.  

The transfer acts like a state regressive value added tax, appearing as direct inflation. But it is collected and dispersed at different economies of scale.  Large states more unsuited, the medium to small taking the greater advantage. It is not long for migration to equalize. Solves the major problem, have these small states so existentially conditional on exogenous events. That reduced sudden stops in the senate.

Kentucky would benefit the most with five maybe six districts. The economy there is based mainly on Disney horse movies. But it makes a great high tech cluster with the natural environment, like another Colorado. It is also a great hub location, competing with Chicago. There total take will be around six billion per year, cold cash to the state capital. That is surplus when your tax is based on value added to horse movies. Relatively low value added inflation tax on a per state basis is the key measure. Small states have low rank, less value net depth, pay fewer taxes but get the most back. It becomes a value added subsidy up to the point the state increases chain depth.

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