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>why should California and the rest of the blue states be financing the whole country The tax code doesn't say that blue states have to pay more, it says wealt
by mrfredward 8y ago
>why should California and the rest of the blue states be financing the whole country
The tax code doesn't say that blue states have to pay more, it says wealthy people have to pay more. As a result, wealthy states pay in more than they get out.
Taxing the rich to fund social programs to help the poor means money will flow from Silicon Valley and Hollywood to rural West Virginia.
- wutbrodo 8y agoPart of it isn't even "wealth" as much as it is "higher cost levels". There's no simple policy answer to this, but increasing marginal tax rates are meant to be a proxy for the diminishing marginal utility of money. In states with a higher price level, citizens are getting taxed at higher rates than their level of wealth would otherwise imply, just due to the inefficiency of the policy. It's the equivalent of failing to adjust for inflation, just spatially instead of across time. As I said though, there's no easy fix that let's you define cost levels in a principled way and adjust for them, so this isn't quite bad policy as much as an unfortunate imperfection in it.
- elindbe2 8y agoBeing able to pay higher costs shows you are wealthier. Living in California is a luxury good which no one is required to purchase. If I suddenly decide to trade my Toyota in for a Porsche that doesn't lower my taxable income.