Gio

Of all the Democratic complaints about the presidential election, the most interesting and ironic came from Lawrence O'Donnell, a leading party strategist and former aide to Sen. Pat Moynihan. He complained on MSNBC that "the segment of the country that pays for the federal government is now being governed by the people who don't pay for the federal government." Mr. O'Donnell added for good measure, "Ninety percent of the red states are welfare client states of the federal government."

It hardly seems either consistent or politically "on message" for Democrats to talk about "welfare client states" when describing Social Security checks received by Floridians and black-lung benefits received by West Virginians. Redistribution has been the sine qua non of Democratic economic policy for 70 years.

Of course, many conservative Republicans have a similar complaint on the tax side of the ledger, noting that the top 1% of taxpayers pay 37% of the federal income tax while the bottom 50% pay just 6%. Of course, both points are related. Rich people pay disproportionately more taxes than do other people. Blue states have higher average incomes and more rich people, and therefore pay higher taxes, than do red states.

Consider deep blue Connecticut and vivid red Oklahoma. Both have roughly the same number of people, five House members and seven electoral votes. Last year, 1.66 million Connecticut tax filers paid $19.1 billion in personal taxes on $107 billion of adjusted gross income. That makes for an average tax rate of 17.9% in Connecticut. In the same year, 1.5 million Oklahoma tax filers paid $6.6 billion in personal taxes on $54 billion in adjusted gross income, an average tax rate of 12.2%.

Mr. O'Donnell's complaint seems to be that blue states like Connecticut pay a much higher average tax rate than do red states like Oklahoma, making them carry a disproportionate share of the federal tax burden. If that is so, enacting John Kerry's proposed tax hike on high-income earners would only have made things worse. Using the Kerry campaign's $200,000 income cutoff, four times as many Connecticut residents as Oklahoma residents would have seen their taxes go up. Connecticut residents would have paid $1.5 billion more in taxes, taking their average rate up 1.3 points to 19.2%, while Oklahoma residents would have paid $300 million more in taxes, taking their average rate up half a point to 12.7%.

Democrats like Mr. O'Donnell seem to want the rich to pay more in taxes, but not for rich states with rich people to pay more taxes. It's unclear how one accomplishes this mathematically. The "fair" amount of tax is in the eye of the beholder. Yet there is one somewhat more sophisticated point that supports the case that blue-state residents are overtaxed, even if one does believe that higher-income people should pay a higher share of their income in taxes.

The cost of living in Connecticut is much higher than in Oklahoma. One index of cost-of-living differentials shows that an income of $130,000 in Connecticut is equivalent to $90,000 in Oklahoma. That means families at those incomes are equally well-off and under standard tax theories about fairness should pay the same share of their income in taxes. Currently, a family of four making $130,000 pays $20,450 in income taxes, or 15.7%, while the family making $90,000 pays $8,450, or 9.4%. If both families were taxed at the Oklahoma rate, the Connecticut family would pay $8,200 less.

What to do? One obvious point is that if you have a federal income tax, you can't have tax rates that vary by state. However, this leads inescapably to the mathematical fact that flat taxes are not only simpler by most measures, they are also the only way to deal with the type of unfairness that Mr. O'Donnell complains about. Flatter is fairer. Flat rates coupled with lump-sum credits, for children for example, are a lot closer to producing a "fair" result by what seem to be Mr. O'Donnell's standards than the current multi-bracketed system he has been schooled to think of as "fair."

But this "blue-state tax blues" problem is much more than just an issue of fairness. It also contributes to a pernicious economic and fiscal cycle for the Northeast and other high-cost, high-tax regions. If a family can live as well on $90,000 in Oklahoma as they can on $130,000 in Connecticut, they obviously would require more money from their employer to live and work in a high-tax state. There may be quality-of-life reasons that might induce them not to demand the whole differential, but they would certainly require more. And, of course, if they must pay an additional $8,200 in federal income taxes for the privilege of living in a high-cost area, this would also fit into their calculations.

But from an employer's point of view, it is quite difficult to justify these kinds of differentials, particularly when they are exacerbated by tax differences. As higher-wage jobs leave the overtaxed, higher-cost areas, both the local economy and the state's tax base decline. This often creates a need to raise state and local taxes still further, making those states and regions still less competitive.

The result is that even though most of the taxes are still paid in high-cost states as a legacy of their industrial past, most of the economic growth in the U.S. has taken place in lower-cost, lower-tax states. For example, between 1977 and 2001, real gross state product in New York rose 2.6% annually, 10% below the national average; but it rose 3.6% per year in Texas, 20% faster than the rest. Importantly, this occurred over a period of time in which the real price of oil fell sharply, much to the disadvantage of Texas; it responded by diversifying its industrial base by offering an attractive business environment.

Perhaps some in the red states might enjoy a federal-tax playing field that is tipped in their direction. But this can only offer short-run satisfaction, since in the long run everyone pays for the distortions and slower growth caused by overtaxing high-cost regions. Red-state politicians tend to understand these dynamic economic effects better than their blue-state counterparts, so this should not be an obstacle.

Ironically, the federal-tax playing field is tipped against the blue states because of the past political preferences of blue-state voters. Here, an ideological change is needed, and perhaps Mr. O'Donnell's complaint is the beginning of such a change in view. The best answer in the long run for red states and blue states alike is the kind of level playing field that only a flatter federal-tax structure can provide.

http://www.opinionjournal.com/editor...l?id=110006048

Bluesman

Three points occurred to me as I read this article:

1) Liberals and their philosophy have created this "problem" (if that's what it is, and if that's how one chooses to view it) of paying a 'too-high' portion of the tax burden by their class warfare strategy of seeing Americans as either exploiter or exploited, based on their income levels. May they now reap the whirlwind of this destructive credo that is based on naked power politics that has as its foundation one of the Seven Deadly Sins - Envy. To complain now that 'their' states, the blue states, are under-represented in relation to their tax burden is unjustified - they had it coming.

2) This is the product of what happens when the liberal's habit of seeing people as belonging to one group or another is indulged. "Identity politics" is what happens when one insists that rights accrue to certain government-approved GROUPS, and not INDIVIDUALS (as codified in the Constitution). Political philosophy really does matter, and here is a great case to demonstrate WHY it matters. By framing this as a matter to be rectified because its 'unfair' that a person is paying more than he recieves from government, the liberal - who made this system the way it is - now finds himself in the absurd position of arguing that a wealthier person from Connecticut is not getting as much back from government as someone making much less in Oklahoma. But INDIVIDUALS pay taxes, not members of GROUPS, and anything that attempts to correct the 'unfairness' would necessarily be incoherent politically. They need to drop this matter, because it would make 'em look even more ridiculous.

3) By this time, and with even more evidence provided by this very story, even liberal Democrats should see that high tax rates retard growth. Low marginal rates are a spur for the economy, and if they'll get over their class warfare arguments and stop trying to soak the rich, we can all get wealthier. But they want to play the 'tax breaks for the rich' card, and they will never stop with the 'fair, progressive' high marginal rates on the most productive members of our society, because God forbid that the rich get richer, even if it causes the poor to get richer (and fewer in numbers, too, which erodes their political base).

I have strong feelings about this subject. It appears that even a liberal can learn a lesson about the way tax rates work - but you have to embarass 'em first.

__________________
"The quickest way of ending a war is to lose it, and if one finds the prospect of a long war intolerable, it is natural to disbelieve in the possibility of victory."
- George Orwell

ChrisF202

Taxes are a killer here. Its not uncommon for one to lose like 30% of their paycheck to taxes alone, not counting food, rent, appliances, etc

nickshepAK

I think some liberals are still in denial and angry about the election. They do not support president Bush or his policies. Therefore, they do not want to pay for his idiotic decisions. I received this letter from a New Yorker a few weeks ago and she explains how "Blue States" oppose this President and his policies. Yet, they are taking on the larger tax burden to pay for them.


"I am a taxpayer. I worked my butt off to get where I did, and so did my parents. My parents saved and borrowed and sent me to college. I worked my way through graduate school. I won a full tuition scholarship to law school. All for the privilege of working 2,600 hours last year. That works out to a 50 hour week, every week, without any vacation days at all. I get to work by 9 am and rarely leave before 9 pm. I eat dinner at my office much more often than I eat dinner at home. My husband and I paid over $70,000 in federal income tax last year. At some point in the future, we will have to pay much more -- once this country faces its deficit and the impossible burden of Social Security. In fact, the areas of the country that supported Kerry -- New York, California, Illinois, Massachusetts -- they are the financial centers of the nation. They are the tax base of this country. How much did you pay, Kansas? How much did you contribute to this government you support, Alabama? How much of this war in Iraq did you pay for?"



rest of the letter: http://www.opednews.com/schroeder_111204_red_states.htm

Bluesman

You are proving my point for me, Nick.

Individuals pay income tax on individual earnings, not because they're members of one state or another, or how they voted.

And if the blue states are the economic centers of the nation, and they don't like the fact that they're paying 'more than their fair share', MAYBE y'all will get with the program and support a flatter tax, and quit whining that 'the rich' (which, by the way, includes your friend the letter-writer) aren't paying their fair share. You can't have it both ways.

Finally, you seem completely confused about what it is you want the federal tax laws to do. Do you want it to be 'fair' (meaning, in your view, that 'the rich' have to be slapped with taxes so that you can finance all the give-aways that benefit you and other members of your class)? Because if you want that, it comes with a sluggish economy and falling tax receipts. Do you want it to raise MORE revenue? Because that means the rich get richer, relative to the low-income people (although they'll get richer, too, albeit at a slower rate).

What do YOU want, Nick? Do you want to correct this problem of blue-staters feeling like they're getting ripped off? HOW?

nickshepAK

As a student and part time worker I really dont get affected to much by taxes. The only thing I was trying to get out there is that the "Blue State" taxpayers are MISERABLE because they have to pay for this presidents "crazy" policies. Im not rich enough to be complaining about overwhelming taxes. Nothing more, nothing less.

Bluesman

Questions like this are exactly why I'm a conservative. Liberals trade on envy and class warfare. They would rather have fewer taxes collected for the country as long as 'the rich' are paying a disproportinate amount of the taxes collected. Because that's 'fair', right? They would rather have an underperforming economy as long as 'the rich' aren't allowed to get 'TOO rich'.

nickshepAK

YOU are missing the whole point of my post. Maybe I didnt explain myself clear enough. By quoting that letter I was only trying to point out that some people including Republicans and Democrats do not want to pay for something they do not support. Ask that lady if it was Bill Clinton in office would she mind paying? She would probably say no. Ask a Republican if they would oppose paying a little more in taxes to help support President Bush's policies and they would probably say no.

Bluesman

Then they need to be conservatives. If we lower the top marginal rates, MAYBE the taxpayers from New York and Connecticut won't have such a noticeably higher tax burden than those from Oklahoma and Texas.

Being from a blue state has nothing to do with how much income tax you pay, and it shouldn't, EVER. It has to do with how much money you made, and unless you and they are willing to come right out and say that rich people from a certain area or that voted a certain way should be taxed at a lower rate than a less-wealthy person from another state or that voted for the winner of the Presidential election...SHUT UP, BECAUSE YOU HAVE NO RATIONAL ARGUMENT.

Bluesman

I follow you just fine. What I'm trying to get across here is that it is not at all significant that she's from New York. It is not germane that Kansas doesn't pay as much as New York.

As far a policies she supports being worth it to her, she makes no mention of that. Her point is that New Yorkers corporately pay more than she thinks they should, and that is for the very good reason that they make more money per capita than the good people of Kansas.

Furthermore, and this is the ironic part, if she is a liberal - your assumption and mine is that she is - she is hoist by her own petard. She is in favor of 'progressive' taxes - the 'soak the rich' class warrior battle-cry. Well, then...how does she like it NOW? Hm? How is it that she feels that she pays too much, even though she makes more and works harder for it than those slackers out there in fly-over country, hm?

She's argiung a conservative position, and she doesn't even know it.

nickshepAK

All this part of the letter says is I dont want to pay for something I dont support. Doesnt mean she doesnt support social security or welfare or any other domestic agency in which her money goes into.

Bluesman

Mate, it's your reading comprehension that needs work. I GOT IT, and you don't.

She doesn't want to pay for things she doesn't support. Well, who does? But she's a liberal. Liberals want a progressive tax structure. She's got her progressive tax rates, and she's unhappy with it, because it kicks her ass. HERS, this time, not some corporate fat-cat - HERS. She's a hypocrite, because she thinks that because she's from New York, she should get a tax break, not like those evil red-staters out there that support the President and his way-too-expensive war.

TOO FRIGGIN' BAD, and as for paying for the war which she doesn't support, she wouldn't pay for as much of it if she weren't a liberal that wants the progressive tax code on RICH PEOPLE LIKE HERSELF.

How 'bout THAT time? Did it get through?

nickshepAK

Nope, I think you should go back. Read the WHOLE letter. Then come back, Mate . If you had read the whole article you would not have to assume she is a liberal. You would know. SHE. DOES. NOT. SUPPORT. PRESIDENT. BUSH. AND. THIS. WAR.MAKE. THOSE. WHO. DO. RICH. OR. POOR. PAY. FOR. IT. NOT. HER. AND. THOSE. LIKE. HER. IN. NEW YORK. MASS. DC. ETC. SHE NEVER SAYS I HATE WHEN RICH PEOPLE LIKE ME HAVE TO PAY MORE FOR SS WELFARE AND OTHER POLICIES THAT SHE MAY SUPPORT.

Lucien LaCroix

None of this would be an issue if our federal government hadn't been tasked--primarily, by liberals--to legislate and spend money based upon the emotions of guilty, pity, and sympathy in a hopeless effort to bring about a 'fair and just' society through check-writing.

Instead of confronting the fundamental flaw that our government's overall spending policies represent, pundits, instead, debate who pays more/less and who receives more/less.

End the spending policies and you end the disagreement. Then, if states want to retain a certain program, voters within that state can approve a state-funded equivalent. Liberals are terrified at such a process because they know that the voters would never vote to reinstate their precious, feel-good spending programs. When people spend money given to them by the federal government, they see it as 'someone else's' money. Not so when the spending authority is a lot closer to home.

Get rid of Social Security. It's an individual's responsibility to save for their retirement. Save or work until the day you die.

Get rid of Medicare. It's an individual's responsibility to pay their medical bills. Yes, medical care is expensive nowadays--and a lot of it is the result of a fat, flabby American populace failing to hold up their end of the bargain in taking care of their bodies. We've become accustomed to taking pills to give us health instead exercising and eating right. The other part of the equation is people wanting extra long retirements with little or no 'unfair' expenditures to tax their budgets.

What's next, a government-funded program to pay for car repairs for those who can't afford it?

Get rid of all the nonsensical federal departments whose job can be done by the states, with a lot less overhead and mismanagement involved. Education, Labor, Interior are but a few that need to be eliminated. For those voters who complain that their state leaders won't take up the slack and do the job, I have a response: Elect those who will. And if you come out on the short end of the stick anyway, then you can move to a state that has policies that you agree with--or you can simply suck it up and endure it.

Sigh...

__________________
"If I see further than other men, it is because I stand upon the shoulders of giants."

Bluesman

One more pass, then I'm giving up on getting you to understand this...

Here we go:
She's a liberal. Liberals want a progressive tax code, which is what we've got. It's what makes her pay what she considers a disproportinate amount for the war in Iraq, as well as what she LIKES paying for. Therefore, she is philosophically confused about how much she's on the hook for. She supported a 'soak the rich' party and still does. Well, she's rich. So she gets the bill to a greater extent than her standard-of-living counterpart in Kansas. She doesn't think that's fair. Boohoo.

Does she get to opt out of paying for the Iraq war? Not unless conservatives like me get to opt of of paying for NPR and crucifxes in jars of urine. She and her party resists a flatter tax, and she calls this 'fair'. If it is, then it's fair for her to pay a higher percentage than a red-stater at a comparable standard of living.

I don't call her a hypocrite for not wanting to pay for things she doesn't support. I call her a hypocrite because she thinks that people less-wealthy than herself that voted for Bush and his policies should pay MORE. That's not how it works, and she knows it, but she doesn't want to conform to the tax code that she supports IF IT GOES AGAINST HER WISHES.

I read the whole letter. In it, she says she's a Kerry voter and a liberal. Fine. She wants to be a liberal, she pays what a liberal says she should pay in taxes, andthat's for ALL of what the governemtn does, not just what she likes. Voting a certain way doesn't mean you get a tax break. I know you're not saying it should, but this resentment of having consequences for supporting a tax code that penalizes you is childish.

And hypocritical.