Thursday, March 22, 2012

Are Blue States Subsidizing Red States?

The debate about the rich subsidizing the poor has been a hot-button issue this election season. While most voters will tend to think about the issue in the context of their economic status, their political identity and geographic location may be just as relevant. There is strong evidence that liberal states, with presumably higher levels of local taxation leading to higher levels of service, are effectively subsidizing conservative states that typically feature a lower individual and business tax burden.

The first map (borrowed from the Washington Post) codes states that received more than a dollar for every federal tax dollar paid in red, and those that received less than a dollar in blue:

This map shows how each state voted in the 2008 presidential election:

While some states differ, the trend is clear and observable: conservative states rely more heavily on federal grants than liberal states do.

As Mathew Yglesias acknowledges, this effect is not necessarily a sign of conscious, systematic  hypocrisy. It does however suggest that many red states enjoy the benefits of government services without shouldering the tax burden that pays for this programming. While this effect has political ramifications surrounding the fact that many prominent “small government” Republicans (and their constituencies) are the primary beneficiaries of federal spending – I’ll leave that discussion to the political scientists and talking heads.  

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