Tax Reform Bill Increases Blue State Subsidization Of Red States
It is a long known fact among prominent economists that the blue states of the United States of America subsidize the red states. It begins with the far higher average per capita incomes of citizens of blue states and significantly larger population densities. This alone adds up to a significantly disproportionate stream of tax revenue to the federal government in comparison to red states.
Further tipping the balance of federal tax payers and federal money takers, contrary to the opinion of many red state politicians and citizens that socialist blue state citizens prefer a life of no working and sucking on the teat of government social assistance programs, the percentage of citizens that collect welfare and disability is markedly higher in red states as opposed to blue states. This further compounds the federal money imbalance that favors red states, but this is nothing compared to what is coming with the new tax legislation.
First, by capping state and local tax deductions at $10,000, the GOP tax law disproportionately takes more money from high tax blue states in the northeast and west coast as compared to lower tax red states. This is nothing short of a direct assault on the middle class and upper middles class citizens of blue states that further ramps up the red states milking of blue states.
Finally, let’s take a look at the assault on college education and college educated people. It is well known that a higher percentage of blue state citizens are college educated in comparison to red state citizens. It is also a known fact that college educated people tend to lean democrat and independent while non-college educated people tend to lean republican, the latter of which is especially true in the era of Trump. It thus should come as no surprise that that red state republicans have no problem further sticking it to those that choose higher education in this tax bill.
Specifically, the tax bill increases taxes on university endowments. At the same time, the tax bill eliminates student loan interest deductions for college students and college graduates.
The truth is that is the Atlantic northeast and west coast states declared their independence, they would enjoy a massive tax cut. In a tax system that already massively favors red states, a tax bill that further compounds this inequity is not tax reform. Let’s call it what it really is: blue state tribute (or red state socialism, whatever you prefer).